Stocks finished little changed on Wednesday after recovering from their afternoon lows, with a relatively balanced showing beneath the surface despite some weakness among the major averages. The S&P 500 finished flat, while the Nasdaq Composite (-0.1%) and DJIA (-0.2%) logged slim declines ahead of NVIDIA's (NVDA 209.95, -3.10, -1.46%) highly anticipated earnings report after the close.

The July Personal Income and Spending report did little to meaningfully alter the inflation picture, with the year-over-year headline and core PCE rates unchanged from June at 3.7% and 3.3%, respectively. Rate expectations initially shifted modestly in response, with the CME FedWatch Tool briefly raising the probability of a 25-basis-point rate hike at the September FOMC meeting to 40% from 36%, but those odds returned to 36% by the close.

Despite the muted index-level performance, participation was relatively balanced. Four S&P 500 sectors finished higher, breadth was nearly even on the NYSE, and the S&P 500 Equal Weighted Index (+0.3%) outperformed its market-cap-weighted counterpart. Decliners held a roughly 7-to-5 advantage over advancers on the Nasdaq.

The industrials sector (+1.1%) stood out on relatively broad strength within the group. Courier stocks were particularly strong, with C.H. Robinson (CHRW 151.73, +8.07, +5.62%) ranking among the top-performing S&P 500 components.

The information technology sector (+0.4%) also provided support despite weakness in NVIDIA (NVDA 209.95, -3.10, -1.46%) ahead of its earnings report. The PHLX Semiconductor Index (+0.2%) eked out a small gain following a choppy session, while software stocks were a relative bright spot despite post-earnings weakness in Intuit (INTU 345.88, -11.58, -3.24%).

Several company-specific developments remained influential elsewhere. The communication services sector (-0.7%) was among the laggards even as Meta Platforms (META 576.14, +6.09, +1.07%) finished higher following a volatile session.

The stock fluctuated after the company reached a proposed settlement with a bipartisan coalition of state attorneys general over claims that Facebook and Instagram harmed younger users. The consumer discretionary sector (-0.6%) also finished lower as NIKE (NKE 38.59, -0.89, -2.25%) and other athletic apparel stocks extended their retreat following Dick's Sporting Goods' (DKS 129.71, +5.40, +4.34%) disappointing earnings report Tuesday.

There was a notable exception outside the S&P 500, as Abercrombie & Fitch (ANF 147.68, +38.78, +35.61%) surged following its Q2 beat, with encouraging underlying sales trends beyond a sizable tariff-refund benefit providing some support to other retail and apparel names.

Meanwhile, the health care sector (-1.0%) finished at the bottom of the sector standings as Moderna (MRNA 149.66, -9.17, -5.77%) gave back more of its gains following last week's triple-digit surge on positive melanoma vaccine results, while Eli Lilly (LLY 1190.03, -43.63, -3.54%) was also a laggard. 

Oil prices generated some afternoon volatility but ultimately finished little changed. WTI crude had traded near $80 per barrel before the open before reversing sharply higher following reports that Iran and Oman agreed on a revenue-sharing arrangement for traffic through the Strait of Hormuz, although an IRGC spokesperson said the U.S. was still preventing the strait from reopening. The spike in crude coincided with the stock market's move to session lows, but oil subsequently surrendered the advance and settled $0.04 lower (-0.1%) at $82.25 per barrel. The energy sector (+0.3%) nevertheless finished with a modest gain.

Ultimately, Wednesday's session reflected a relatively balanced market awaiting its next major catalyst. The morning's inflation data produced little lasting change in rate expectations, while company-specific developments and swings in oil drove much of the intraday action. Attention now turns squarely to NVIDiA's earnings report after the close, which could set the tone for the semiconductor trade and broader technology sector on Thursday.

U.S. Treasuries retreated on Wednesday, pulling back from two days of solid gains in longer tenors. The U.S. Treasury sold $70 billion in 5-year notes to softer demand than what was seen at yesterday's 2-year note offering. The 2-year note yield settled up two basis points to 4.22%, and the 10-year note yield settled up three basis points to 4.66%. 

• Russell 2000: +21.1% YTD
• S&P Mid Cap 400: +15.7% YTD
• Nasdaq Composite: +12.4% YTD
• S&P 500: +12.1% YTD
• DJIA: +11.2% YTD

Reviewing today's data: 

• Weekly MBA Mortgage Applications Index -1.0%; Prior -0.4%
• July Personal Income 0.4% (Briefing.com consensus 0.2%); Prior 0.2%, July Personal Spending 0.2% (Briefing.com consensus 0.2%); Prior 0.3%, July PCE Prices 0.2% (Briefing.com consensus 0.1%); Prior -0.1%, July PCE Prices - Core 0.2% (Briefing.com consensus 0.2%); Prior 0.1%
  • The key takeaway from the report is that year-over-year rates for the PCE Price Index (3.7%) and the core-PCE Price Index (3.3%) remained at levels from June, so the report did little to alter the market's view of the latest income and spending trends, aside from an improvement in the personal savings rate.
• Q2 GDP - Second Estimate 1.5% (Briefing.com consensus 1.5%); Prior 1.5%, Q2 GDP Deflator - Second Estimate 6.4% (Briefing.com consensus 6.3%); Prior 6.3%
  • The key takeaway from the report is that the overall growth reading held steady as an upward revision to real final sales to private domestic purchasers (to 4.2% from 3.9%) offset a higher drag from imports.
• July Durable Orders 1.1% (Briefing.com consensus 0.5%); Prior was revised to 0.5% from 0.3%, July Durable Goods - ex transportation 0.4% (Briefing.com consensus 0.5%); Prior was revised to 1.1% from 0.6%
  • The key takeaway from the report is that the headline beat was driven by a 12.7% jump in orders for nondefense aircraft and parts while growth in orders excluding transportation undershot expectations slightly due in part to a pullback in new orders for computers and electronic products (-1.1%). However, these orders are still up a healthy 14.3% year-over-year.