The stock market faced a significant amount of volatility today, with stocks opening to broad strength before a sharp reversal across tech names sent the major averages sharply lower. The S&P 500 (-0.3%), Nasdaq Composite (-1.0%), and DJIA (+0.2%) finished mostly lower, though strength in the broader market helped the indices finish well off their midday lows.

The information technology sector (-1.8%) was at the core of the intraday retreat, finishing as the worst-performing S&P 500 sector. Early weakness across software names limited gains in the sector, but a continuation of yesterday's buying across semiconductor stocks saw the sector advance nearly 1% this morning.

The PHLX Semiconductor Index (-1.9%) was up nearly 2% before charting a sharply lower course that rippled across the broader market. Around midday, the index was down nearly 8%. Most semiconductor and related names reclaimed some of the weakness, but Coherent (COHR 355.94, -45.99, -11.44%) finished as the worst-performing S&P 500 component, while electrical component names such as Corning (GLW 173.94, -13.60, -7.25%) and Lumentum (LITE 821.76, -73.64, -8.22%) also finished near their session lows.

Elsewhere in the sector, Apple (AAPL 290.55, -10.99, -3.64%) extended yesterday's decline as investors remained underwhelmed by the company's AI announcements at WWDC, including updates to Siri and other artificial intelligence features.

Notably, today's reversal across the tech and mega-cap spaces came without a news catalyst, which likely explains the willingness of investors to steadily buy back into those same stocks throughout the afternoon. The Vanguard Mega Cap Growth ETF (-1.1%) finished firmly lower, but significantly improved from the session lows that left it with a nearly 4% loss.

Strength at the sector level also steadily improved throughout the afternoon, returning to pre-midday levels. The energy sector (-1.6%) was the only other S&P 500 sector to finish with a loss as relatively tame developments on the geopolitical front kept oil prices lower, with crude oil futures settling today's session $3.10 lower (-3.4%) at $88.16 per barrel.

The lower oil prices added support for the broader market, with several cyclical sectors, including the materials (+1.7%), industrials (+1.2%), and financials (+0.9%) sectors, weathering the intraday volatility to notch solid gains.

Even the consumer discretionary sector (+0.1%), which was weighed down by weakness in Tesla (TSLA 396.68, -12.27, -3.00%), managed to finish slightly higher, supported by strength in its homebuilder components that sent the iShares U.S. Home Construction ETF 4.0% higher.

Additionally, there was a solid rotation into more defensive sectors, with the health care (+1.3%), utilities (+1.1%), and consumer staples (+1.0%) sectors all posting solid gains. J.M. Smucker (SJM 112.39, +10.62, +10.44%) was the top-performing S&P 500 name after topping EPS expectations and issuing upside guidance.

The real estate sector (+2.1%) captured the widest gain, building on its Q2 strength as investors continue to rotate into lower-volatility, income-oriented areas of the market.

As a result, the S&P 500 Equal Weighted Index (+0.8%) finished with a solid gain despite the retreat in the market-weighted S&P 500 (-0.3%).

Outside of the S&P 500, the Russell 2000 (+0.4%) and S&P Mid Cap 400 (+0.9%) outperformed. 

Overall, today's session underscored the volatility that continues to characterize semiconductor and other AI-related names, though the rebound from session lows also reflected a sustained eagerness to buy dips across growth-oriented stocks. At the same time, the broader market remained notably resilient, with strength spanning cyclical, defensive, and income-oriented sectors alike. The divergence between the equal-weighted and market-weighted S&P 500 suggests that participation beneath the surface remains constructive, even as leadership among the market's largest technology names becomes increasingly volatile ahead of SpaceX's IPO on Friday.

U.S. Treasuries had a steady showing on Tuesday, keeping yields in a narrow range just below their highest levels in three weeks, which masked a volatile session on Wall Street. The U.S. Treasury launched this week's note and bond auction slate with a 3-year note auction, which was received relatively well given the overall volatility across capital markets.

The 2-year note yield settled down four basis points to 4.12%, and the 10-year note yield settled down two basis points to 4.53%.

• Russell 2000: +15.5% YTD
• S&P Mid Cap 400: +12.9% YTD
• Nasdaq Composite: +10.5% YTD
• S&P 500: +7.9% YTD
• DJIA: +5.8% YTD

Reviewing today's data:

• May NFIB Small Business Optimism 95.3; Prior 95.9
• April Trade Balance -$55.9 bln (Briefing.com consensus -$55.5 bln); Prior was revised to -$56.6 bln from -$60.3 bln
  • The key takeaway from the report is that the export strength was concentrated in crude oil exports (+$6.4 billion), fuel oil exports (+$1.3 billion), and other petroleum products (+$1.0 billion), which were boosted by the supply disruptions tied to the difficulties traversing the Strait of Hormuz.
• May Existing Home Sales 4.17 mln (Briefing.com consensus 4.07 mln); Prior was revised to 4.04 mln from 4.02 mln
  • The key takeaway from the report is that existing home sales hit their highest level since December, bolstered by lower mortgage rates (versus the year-ago period) and income gains outpacing home price growth, which led to improving affordability conditions across all regions.
• April Wholesale Inventories 0.6% (Briefing.com consensus 0.5%); Prior 1.3%