Mid-day: Growth Stocks, So Heavy Bro

The major averages are facing some pressure at midday, as the Dow (-0.1%) and S&P 500 (-0.1%) hover just below their flat lines while the Nasdaq (-0.9%) underperforms after showing relative strength in recent days.

The broader market appeared in positive territory in early trade thanks to gains in most sectors, but renewed pressure on growth stocks in the technology (-0.7%) and consumer discretionary (-0.4%) sectors sent the Nasdaq into the red while the S&P 500 followed, though recent trade has seen a rise off lows.

Today’s weakness in growth stocks has been reflected by the Vanguard Mega Cap Growth ETF ( MGK 231.80, -1.56, -0.7%), which has slipped toward the midpoint of yesterday’s range. The selling comes as Treasuries widen this week’s considerable losses after a research note from Citigroup forecast that the Fed will raise the fed funds rate range by 50 bps at each of the next four policy meetings. Treasuries reached fresh lows for the year today, with the 10-yr yield rising 14 bps to 2.48%. The benchmark yield has increased by 33 bps this week.

Seven sectors continue holding gains at midday with energy (+1.7%), financials (+0.9%), and utilities (+0.8%) in the lead.

The energy sector has outperformed for the bulk of the session even as crude oil traded lower in morning action. However, WTI crude is now up $0.99, or 0.9%, at $113.33/bbl, reclaiming the bulk of yesterday’s loss. Oil bounced off its midweek low amid reports of an attack on an oil facility in Saudi Arabia. On a related note, Chevron ( CVX 168.86, +2.56, +1.6%) has reportedly been authorized to resume operations in Venezuela.

Elsewhere, the utilities sector has extended this week’s gain to 2.8%, as it benefits from this week’s volatility in the broader market. Financials, meanwhile, are benefiting from higher rates with regional banks showing relative strength. Comerica ( CMA 96.94, +2.90, +3.1%) is the best performer in the sector, rising back above its 50-day moving average (94.30).

Reviewing today’s economic data:

  • Pending Home Sales fell 4.1% in February (Briefing.com consensus 1.2%) after decreasing a revised 5.8% (from -5.7%) in January.
  • The final March reading for the University of Michigan Consumer Sentiment Index checked in at 59.4 (Briefing.com consensus 59.5) versus the preliminary reading of 59.7. The final reading for February was 62.8. The March reading marks the lowest level for the index since October 2012.
  • The key takeaway from the report is that rising inflation is eating away at consumer sentiment, as consumers recognize their standard of living has been reduced because their income is not keeping up with inflation. Notably, it was indicated in the report that 32% of consumers expect their overall financial position to worsen in the year ahead, which is the highest level since the survey started in the mid-1940s.
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