Stock Market Update

[BRIEFING.COM] The major averages have staged an impressive recovery from their session lows, with the S&P 500 (+0.1%) and Nasdaq Composite (flat) moving into positive territory after sliding firmly lower this morning. The DJIA (-0.2%) remains modestly lower, while the Russell 2000 (-0.3%) and S&P Mid Cap 400 (-0.3%) have also recovered substantially from their earlier lows.

The turnaround has coincided with a sharp reversal in two of the primary headwinds that pressured stocks this morning. Crude oil surged above $96 per barrel earlier as the week's UN meetings failed to produce meaningful progress between the U.S. and Iran, but has since given back the bulk of that advance following a Reuters report that a potential phased reopening of the Strait of Hormuz is being discussed. WTI crude is now up $1.77 (+1.9%) at $93.93 per barrel, helping the broader market recover as concerns surrounding another sharp increase in energy prices ease.

Treasury yields have also backed away from their morning highs after reaching multi-year levels earlier in the session. The 10-year note yield is now up just two basis points at 5.13%, removing some of the pressure that had weighed heavily on growth stocks during the opening portion of the session.

That improvement has fueled a pronounced rebound across technology and mega-cap stocks. The information technology sector (-0.2%) and PHLX Semiconductor Index (-0.4%) remain modestly lower but have recovered sharply from their session lows, while the Vanguard Mega Cap Growth ETF (+0.2%) has turned positive.

Oracle (ORCL 139.04, -5.52, -3.82%) remains a notable laggard within the group after Bloomberg reported that the company sent a "force majeure" notice to the developer of its New Mexico data center project.

Meta Platforms (META 769.75, +25.65, +3.45%) continues to stand apart from the broader volatility in mega-cap stocks. Shares are extending their post-Meta Connect outperformance amid continued enthusiasm surrounding the company's AI efforts and Muse agent, bringing META's September gain to roughly 34%. The strength has helped propel the communication services sector (+1.5%) to the top of the sector standings.

Several other areas have participated in the rebound. The real estate sector (+0.3%) has reversed an earlier decline as Treasury yields eased from their highs, while the health care sector (+0.6%) continues to outperform behind strength in Moderna (MRNA 188.14, +6.03, +3.31%) and Eli Lilly (LLY 1187.67, +36.68, +3.19%). The energy sector (+0.5%) remains higher but has seen its gain narrow alongside the pullback in crude oil.

The recovery has unfolded despite additional commentary from Fed officials pointing toward the possibility of further policy tightening. New York Fed President John Williams (voting FOMC member) said it is reasonable to expect another rate increase this year, while Philadelphia Fed President Anna Paulson (voting FOMC member) said that "some modest further tightening may be warranted" if economic conditions evolve as she expects.

Today's action has therefore undergone a meaningful shift from the broad selling seen shortly after the open. The retreat in oil from its morning high and the easing in Treasury yields have helped growth stocks recover, allowing the S&P 500 and Nasdaq to erase their earlier losses.

Reviewing today's data:

• Q2 Current Account Balance -$246.0B (Briefing.com consensus -$221.0B; Prior -$212.6B revised from -$228.6B)
• Initial claims decreased 1,000 to 197,000 (Briefing.com consensus: 202,000) for the week ending September 19. Continuing claims increased 2,000 to 1.719 million for the week ending September 12.
  • The key takeaway from the report is that it shows no change in the understanding that layoff activity is quite low, which is reflective of a generally solid demand environment.
• New home sales increased 6.4% month-over-month in August to 684,000 (Briefing.com consensus: 610,000) from an upwardly revised 643,000 (from 607,000) in July. On a year-over-year basis, new home sales were down 2.0%.
  • The key takeaway from the report is that the latest monthly sales rebound exceeded expectations and coincided with lower prices, but sales still trailed their year-ago level.
• 09/19 EIA Natural Gas Inventories +53 bcf (Prior +44 bcf)