Stock Market Update

[BRIEFING.COM] The major averages initially saw relatively subdued trading following a full slate of economic data this morning, but stocks have since moved lower alongside a reversal in oil prices. The S&P 500 (-0.2%), Nasdaq Composite (-0.4%), and DJIA (-0.3%) are trading near their session lows shortly after midday.

The July Personal Income and Spending report did little to meaningfully alter the inflation picture, with the year-over-year headline and core PCE rates unchanged from June at 3.7% and 3.3%, respectively. Still, the CME FedWatch Tool now assigns a 40% probability to a 25-basis-point rate hike at the September FOMC meeting, up from 36% immediately before the data.

The tone beneath the surface has deteriorated as oil prices have climbed, leaving just four S&P 500 sectors in positive territory. Despite the broader market weakness, there has been no shortage of company-specific developments generating several notable moves across individual stocks. Meta Platforms (META 575.48, +5.44, +0.95%) has seen choppy trading following its proposed settlement with a bipartisan coalition of state attorneys general over claims that Facebook and Instagram harmed younger users. The stock currently trades higher, but broader weakness across the communication services sector (-1.0%) leaves the group among the worst-performing S&P 500 sectors today.

The consumer discretionary sector (-1.1%) is down similarly as NIKE (NKE 38.58, -0.90, -2.29%) and other athletic apparel stocks continue to retreat following Dick's Sporting Goods'(DKS 128.73, +4.42, +3.56%) disappointing earnings report yesterday. However, Abercrombie & Fitch (ANF 144.84, +35.94, +33.00%), which is not an S&P 500 component, has surged following its Q2 results, providing some support to other retail and apparel names.

The health care sector (-1.0%) is another laggard as Moderna (MRNA 146.78, -12.05, -7.59%) gives back some of its recent gains.

Meanwhile, the information technology sector (-0.1%) has oscillated around its flatline, with NVIDIA (NVDA 209.58, -3.48, -1.63%) among the mega-cap laggards ahead of its highly anticipated earnings report after the close. The PHLX Semiconductor Index is down 0.5%.

There are still some notable pockets of strength. The industrials sector (+0.9%) has outperformed since the open, with courier stocks such as C.H. Robinson (CHRW 152.41, +8.75, +6.09%) ranking among the top-performing S&P 500 components.

More recently, the energy sector (+1.2%) has moved to the top of the sector standings following reports that Iran and Oman agreed on a revenue-sharing arrangement for traffic through the Strait of Hormuz, although an IRGC spokesperson said the U.S. is still preventing the strait from reopening. WTI crude, which traded near $80 per barrel before the open, is now up $0.56 (+0.7%) at $82.92 per barrel, with the reversal in oil coinciding with the broader market's slide to session lows.

Overall, the market's initially muted response to this morning's economic data has given way to increased selling as the rebound in crude oil adds another source of uncertainty. With breadth weakening attention remains split between developments surrounding the Strait of Hormuz and NVIDIA's earnings after the close.

Reviewing today's data: 

• Weekly MBA Mortgage Applications Index -1.0%; Prior -0.4%
• July Personal Income 0.4% (Briefing.com consensus 0.2%); Prior 0.2%, July Personal Spending 0.2% (Briefing.com consensus 0.2%); Prior 0.3%, July PCE Prices 0.2% (Briefing.com consensus 0.1%); Prior -0.1%, July PCE Prices - Core 0.2% (Briefing.com consensus 0.2%); Prior 0.1%
  • The key takeaway from the report is that year-over-year rates for the PCE Price Index (3.7%) and the core-PCE Price Index (3.3%) remained at levels from June, so the report did little to alter the market's view of the latest income and spending trends, aside from an improvement in the personal savings rate.
• Q2 GDP - Second Estimate 1.5% (Briefing.com consensus 1.5%); Prior 1.5%, Q2 GDP Deflator - Second Estimate 6.4% (Briefing.com consensus 6.3%); Prior 6.3%
  • The key takeaway from the report is that the overall growth reading held steady as an upward revision to real final sales to private domestic purchasers (to 4.2% from 3.9%) offset a higher drag from imports.
• July Durable Orders 1.1% (Briefing.com consensus 0.5%); Prior was revised to 0.5% from 0.3%, July Durable Goods - ex transportation 0.4% (Briefing.com consensus 0.5%); Prior was revised to 1.1% from 0.6%
  • The key takeaway from the report is that the headline beat was driven by a 12.7% jump in orders for nondefense aircraft and parts while growth in orders excluding transportation undershot expectations slightly due in part to a pullback in new orders for computers and electronic products (-1.1%). However, these orders are still up a healthy 14.3% year-over-year.