Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.3%), Nasdaq Composite (-0.7%), and DJIA (-0.8%) are lower shortly after midday as rising oil prices, renewed pressure from higher interest rates, and weakness across retail and mega-cap stocks weigh on the market.

Oil is one of the more notable influences today, with crude prices climbing after President Trump threatened renewed economic measures against Iran. Treasury Secretary Scott Bessent added to the geopolitical focus, telling CNBC that he will hold a press conference Monday to discuss additional actions against Iran, which he described as potentially the "greatest coordinated economic isolation in the history of the world."

Bessent also said Treasury buybacks could exceed the $4 billion amount announced yesterday. The initial announcement provided a meaningful boost to Treasuries and stocks on Wednesday as yields retreated, but some of that rate relief is reversing today. Treasury yields are moving higher alongside another rise in oil prices, creating a more challenging backdrop for rate-sensitive and consumer-oriented stocks.

The consumer discretionary sector (-1.4%) is among the weakest performers, with cruise lines, homebuilders, and apparel stocks all under pressure.

The consumer staples sector (-1.2%) holds a similar loss following a disappointing response to Walmart (WMT 104.22, -10.08, -8.82%) earnings report. Outside the S&P 500, Advance Auto (AAP 41.64, -14.54, -25.87%) is plunging following its quarterly results, helping send the State Street SPDR S&P Retail ETF down 2.1%.

The weakness in retail contributes to a generally negative tone beneath the surface, with decliners outpacing advancers by roughly 3-to-2 on the NYSE and 2-to-1 on the Nasdaq.

The health care sector (-0.7%) is another laggard as Moderna (MRNA 129.68, -44.70, -25.64%) gives back some of yesterday's extraordinary gain. The stock is down by double digits today after more than doubling Wednesday following positive results for its experimental cancer vaccine with Merck (MRK 151.58, -0.62, -0.41%).

Technology has been comparatively resilient despite weakness across several mega-cap stocks. The information technology sector is little changed, while the PHLX Semiconductor Index (+0.3%) has oscillated between gains and losses following two consecutive sessions of sharp declines.

Still, the Vanguard Mega Cap Growth ETF is down 0.5%, contributing to the Nasdaq's underperformance. Energy (+0.9%) is the clear sector leader as crude prices extend their recent advance.

The materials (+0.4%) and real estate (+0.4%) sectors are the only other S&P 500 sectors holding gains, underscoring the generally weak tone across the broader market.

The pressure is also evident outside the large-cap benchmarks. The Russell 2000 (-1.2%) is underperforming as higher rates weigh particularly heavily on smaller companies, while the S&P MidCap 400 (-0.5%) holds a more modest loss.

Overall, the market is contending with several headwinds at once after yesterday's broadening-out advance. Renewed concerns surrounding Iran have pushed oil prices higher, the reversal of some of Wednesday's rate relief is weighing on rate-sensitive groups, and disappointing reactions to several retail earnings reports have added company-specific pressure, leaving the major averages and broader market mostly lower at midday.

Reviewing today's data:

• August Philadelphia Fed Index 47.4 (Briefing.com consensus 25.0); Prior 41.4
• Weekly Initial Claims 206K (Briefing.com consensus 206K); Prior was revised to 212K from 209K, Weekly Continuing Claims 1.799 mln; Prior was revised to 1.781 mln from 1.777 mln
  • The key takeaway from the report is that even with the increase in four-week moving averages for initial and continuing claims, overall levels are not setting off alarm bells concerning increased layoff activity.
• July Leading Economic Index 0.2% (Briefing.com consensus -0.1%); Prior was revised to -0.1% from -0.2%