Stock Market Update

[BRIEFING.COM] The major averages are lower at midday, although the weakness remains relatively modest outside the DJIA as rising oil prices and renewed geopolitical tensions weigh on sentiment. The S&P 500 (-0.4%) and Nasdaq Composite (-0.1%) have recovered from their session lows, while the DJIA (-1.1%) remains under considerably more pressure amid pronounced weakness in select components.

Crude oil is up $0.74 (+0.8%) to $92.21 per barrel, but has pulled back from its earlier high. The advance follows another pickup in Middle East hostilities over the weekend, including an exchange of strikes between the U.S. and Iran and a Houthi attack on a Saudi energy facility. The energy sector (+0.6%) remains higher alongside crude, while the utilities (+1.0%) and real estate (+0.5%) sectors are also outperforming.

Still, the broader market has been relatively subdued, with investors awaiting potentially more consequential catalysts later in the holiday-shortened week. The August Producer Price Index is due Thursday, followed by the Consumer Price Index on Friday, with both reports carrying the potential to shift rate expectations ahead of next week's FOMC meeting.

Eight of the 11 S&P 500 sectors trade lower, led by a sizable decline in the health care sector (-2.2%). Amgen (AMGN 394.31, -42.92, -9.82%) is among the day's weakest S&P 500 components after clinical trial setbacks at Novartis AG (NVS 137.56, -22.42, -14.02%) weighed on related names, while the iShares Biotechnology ETF (-1.9%) has also faced considerable pressure. The weakness in Amgen, a DJIA component, has contributed to the blue-chip average's pronounced underperformance.

The financials sector (-1.0%) is another relative laggard.

Meanwhile, the information technology sector (-0.2%, holds a much more modest loss thanks to considerable strength across semiconductor stocks. The PHLX Semiconductor Index is up 1.6%, helping offset weakness in software stocks depite considerable weakness in NVIDIA (NVDA 225.84, -4.52, -1.96%). Intel (INTC 105.56, +9.76, +10.19%) is a standout following positive analyst commentary and reports of potential price increases, while Advanced Micro Devices (AMD 509.81, +32.24, +6.75%) is also sharply higher following upbeat commentary regarding accelerating AI demand and its server CPU opportunity.

Qualcomm (QCOM 174.88, +6.14, +3.64%) is also contributing after highlighting a multi-year agreement with Amazon (AMZN 257.77, -0.74, -0.29%) covering custom silicon and optical connectivity solutions, which management said provides significant validation for its expanding data center business.

Optical stocks are another notable source of strength after Verizon (VZ 50.08, -0.06, -0.11%) and Corning (GLW 168.14, +13.84, +8.97%) announced a multi-billion dollar agreement covering more than 80 million miles of high-density optical fiber and connectivity solutions from 2027 through 2032. The deal is being viewed as a positive read-through for the broader optical infrastructure market, helping propel sizable gains in Lumentum (LITE 994.85, +113.60, +12.89%) and Coherent (COHR 307.47, +25.61, +9.09%).

Overall, rising oil prices and renewed geopolitical tensions have created a modestly negative backdrop for stocks to begin the abbreviated week. Semiconductor and optical strength have provided an important counterweight, particularly for the Nasdaq Composite, but trading remains relatively subdued as investors look ahead to the week's key inflation reports.

Reviewing today's data: 

• August NFIB Small Business Optimism 98.7 (Briefing.com consensus 99.3); Prior 99.8