Mid-day: Our rebound rally hits a speed bump

The stock market is cooling off from a two-week rally amid tempered hopes for a timely Russia-Ukraine ceasefire. The S&P 500 is down 0.3%, the Nasdaq Composite is down 0.4%, and the Dow Jones Industrial Average is down 0.1%.

The S&P 500 entered the session up 11.0% since March 14, trailing only the Nasdaq’s 16.5% gain over the same period, so to see Russia refuting yesterday’s reports of a breakthrough in peace talks and redirecting troops to eastern Ukraine has presumably served as a convenient excuse to take some profits.

Presently, eight of the 11 S&P 500 sectors are trading lower, including the information technology (-0.6%) and consumer discretionary (-0.9%) sectors after outperforming yesterday. Apple ( AAPL 178.19, -0.76, -0.4%) is on pace to snap an 11-session winning streak.

On the upside, the energy (+0.8%), health care (+0.2%), and utilities (+0.3%) sectors are trading higher with the former keying off higher oil prices ($107.20/bbl, +2.97, +2.8%). On a related note, the EIA reported a larger-than-expected build in weekly crude inventories (3.45 million).

Lululemon athletica ( LULU 383.84, +39.82, +11.6%) is a notable standout, rising over 10% after beating top and bottom-line estimates, issuing upside guidance, and authorizing a $1.0 billion share repurchase program. Micron ( MU 82.25, +0.20, +0.2%) is up modestly following its better-than-expected results and guidance.

The Treasury market continues to look unhealthy with the 2s10s spread narrowing to two basis points amid concerns about a Fed policy mistake. The 2-yr yield is down two basis points to 2.33%, and the 10-yr yield is down five basis points to 2.35%. The U.S. Dollar Index is down 0.6% to 97.86.

The compression in yields has taken a toll on the bank stocks. The SPDR S&P Bank ETF ( KBE 53.75, -1.20) is down 2.2%, versus a 0.6% decline for the S&P 500 financials sector.

Reviewing today’s economic data:

  • The third estimate of Q4 GDP showed a downward revision to 6.9% (Briefing.com consensus 7.1%) from the second estimate of 7.0%. The GDP Price Deflator was left unrevised at 7.1% (Briefing.com consensus 7.1%).
  • The key takeaway from the report is that the downward revision was owed to lower personal consumption expenditures and exports while private inventory investment was revised higher.
  • The ADP Employment Change report estimated that 455,000 jobs were added to private sector payrolls in March (Briefing.com consensus 440,000). The increase in February was upwardly revised to 486,000 from 475,000.

  • The weekly MBA Mortgage Applications Index fell 6.8% following an 8.1% decline in the prior week.

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