Stock Market Update

[BRIEFING.COM] The S&P 500 (-0.2%), Nasdaq Composite (-0.1%), and DJIA (-0.7%) are modestly lower just after midday after a relatively subdued start gave way to broader selling alongside a sharp rise in oil prices.

Reports that Houthi forces claimed an attack on a Saudi-flagged tanker in the Red Sea sent oil to its highs of the day. WTI crude is now up $2.80 (+3.7%) to $78.02 per barrel, leaving the energy sector (+1.2%) as one of just two S&P 500 sectors in positive territory.

Before the late-morning downturn, trading was largely shaped by mixed earnings reactions and choppy sector performance rather than a clear directional catalyst. The information technology sector (+0.2%) opened lower, recovered to post a solid gain, and now oscillates near its flat line. Semiconductor stocks continue to show relative strength. Sandisk (SNDK 1280.68, -69.82, -5.17%) and Western Digital (WDC 460.99, -58.18, -11.21%) remain lower after both companies beat earnings expectations but issued somewhat underwhelming guidance. However, each stock has recovered considerably from its opening loss, helping lift the semiconductor group off its opening lows. The PHLX Semiconductor Index is currently off its session highs but still up 1.1%.

Software remains a weak spot within technology. AppLovin (APP 340.78, -77.02, -18.43%) and Datadog (DDOG 233.82, -49.35, -17.43%) face sharp post-earnings losses, weighing on the iShares GS Software ETF (IGV 98.81, -2.50, -2.47%), although another solid showing from Microsoft (MSFT 494.71, +7.25, +1.49%) helps offset some of that pressure.

Honeywell Aerospace (HONA 163.43, -40.21, -19.75%) and Axon (AXON 534.12, -75.37, -12.37%) are both sharply lower following their earnings reports, weighing on the industrials sector (-0.4%), which is also pressured by weakness across its oil-sensitive airline and trucking names.

The communication services sector (-0.8%) is among the worst-performing S&P 500 sectors today as Alphabet (GOOG 356.69, -3.44, -0.96%) continues to move lower after announcing several high-profile AI departures yesterday. Mega-cap stocks are having a subdued session, with the Vanguard Mega Cap Growth ETF (-0.2%) matching the S&P 500's retreat.

In other mega-cap news, SpaceX (SPCX 109.72, +1.44, +1.33%) has surrendered most of an early gain as investors digest the company's first post-IPO share unlock. The expiration makes an additional batch of shares eligible for sale, raising the prospect of increased supply and added volatility even though the actual impact will depend on how many early investors choose to sell.

So far, today's action marks another consolidation day following the market's powerful rally earlier this week. While a spike in oil prices weighed on sentiment late this morning, the broader backdrop remains constructive as earnings continue to exceed expectations, even if lofty expectations weigh on select tech names.

Reviewing today's data:

• Q2 Productivity - Prel 1.4% (Briefing.com consensus 0.8%); Prior was revised to 0.8% from 0.3%, Q2 Unit Labor Costs - Prel 1.3% (Briefing.com consensus 1.7%); Prior was revised to 1.3% from 1.8%
  • The key takeaway from the report is that rising productivity helped keep labor costs in check.
• Weekly Initial Claims 199K (Briefing.com consensus 200K); Prior was revised to 198K from 197K, Weekly Continuing Claims 1.801 mln; Prior was revised to 1.777 mln from 1.782 mln
  • The key takeaway from the report, once again, is the extraordinarily low level of initial jobless claims, which reflects an environment in which employers are still reluctant to cut staff. That will be read as a good sign for economic demand.
• June Wholesale Inventories 0.2% (Briefing.com consensus 0.3%); Prior 0.3%