The major averages finished higher across the board today, with the S&P 500 (+0.4%), Nasdaq Composite (+0.6%), and DJIA (+0.3%) overcoming another bout of weakness across semiconductor stocks as encouraging inflation data and continued strength among several other mega-cap technology names supported the broader market. Investors also digested another slate of earnings reports, Fed commentary, and geopolitical developments.

Semiconductor stocks remained a notable source of weakness, though they recovered well off their session lows into the close. The PHLX Semiconductor Index finished down 2.1% after falling more than 4% earlier in the session. ASML (ASML 1815.27, +39.63, +2.23%) delivered a beat-and-raise earnings report before the open, but the stock and the broader semiconductor space reversed course after initially pointing toward another day of gains, though the afternoon saw a solid intraday recovery.

Memory names such as Micron (MU 904.28, -78.84, -8.02%), Sandisk (SNDK 1615.00, -142.82, -8.12%), and, outside the S&P 500, SK hynix Inc. (SKHY 176.46, -17.46, -9.00%) were among the group's biggest laggards.

The information technology sector (-0.1%) also rebounded sharply from its intraday lows, finishing just shy of unchanged as strength across several of its largest components helped offset semiconductor weakness. Microsoft (MSFT 395.63, +10.70, +2.78%) and Apple (AAPL 327.50, +12.64, +4.01%) were "Magnificent Seven" standouts, with Apple benefiting from a report from The Information that the company is exploring acquisitions to bolster its AI chip capabilities.

Alphabet (GOOG 370.21, +12.88, +3.60%) and Amazon (AMZN 254.96, +7.47, +3.02%) also posted solid gains, helping lift the communication services (+2.8%) and consumer discretionary (+1.4%) sectors. The Vanguard Mega Cap Growth ETF rose 1.0%, underscoring continued leadership across growth-oriented stocks outside of the semiconductor space.

The financials sector (+0.7%) was another relative outperformer following another busy round of corporate news. BlackRock (BLK 1093.40, +67.96, +6.63%) finished sharply higher after earnings, while Morgan Stanley (MS 228.42, +0.75, +0.33%) ended flattish despite also topping expectations.

Elsewhere, PayPal (PYPL 55.52, +8.15, +17.20%) was the best-performing S&P 500 component after Reuters reported that Stripe and Advert International have offered to acquire the company for approximately $53 billion.

The industrials sector (-0.2%) recovered alongside semiconductor stocks during the afternoon, though Pentair (PNR 64.33, -11.35, -15.00%) remained a notable drag after sharply lowering its second-quarter and full-year guidance, citing weaker pool equipment demand driven by a more pronounced inventory realignment and deteriorating business conditions.

The energy sector (-0.8%) gave back a portion of its gains from earlier in the week as WTI crude oil futures settled today's session $0.22 higher (+0.3%) at $79.62 per barrel following a relatively quiet day of geopolitical headlines involving the U.S. and Iran. Oil prices moved higher after the settlement, however, after U.S. Central Command announced a second wave of strikes against Iran.

The utilities sector (-1.0%) was another laggard as investors continued rotating away from more defensive areas of the market in favor of growth-oriented stocks.

On the policy front, another favorable inflation reading reinforced yesterday's encouraging CPI report, as the June PPI fell 0.3% month-over-month (Briefing.com consensus: 0.1%). The report further reduced the market's expectations for a near-term rate hike, with the CME FedWatch Tool's implied probability of the FOMC leaving rates unchanged at its September meeting rising to 51.9% from 41.9% yesterday. New York Fed President John Williams (FOMC voting member) said there are encouraging reasons to believe inflation has peaked, while Fed Governor Lisa Cook (FOMC voting member) reiterated that she would support tighter policy if inflation fails to show further signs of cooling.

Despite another volatile session for semiconductor stocks, today's trading demonstrated that investors remained willing to reward other growth-oriented areas of the market when the inflation backdrop improved. While chipmakers remained an important source of day-to-day volatility, strength across the broader mega-cap technology complex ultimately proved sufficient to lift the major averages higher.

U.S. Treasuries had a solid showing today, primarily shorter-dated securities, which were bolstered by a market-friendly PPI reading this morning that kept rate-hike concerns for the July FOMC meeting in check. The 2-year note yield settled down six basis points to 4.13%, and the 10-year note yield settled down four basis points to 4.55%. 

• Russell 2000: +19.9% YTD
• S&P Mid Cap 400: +14.3% YTD
• Nasdaq Composite: +13.0% YTD
• S&P 500: +10.6% YTD
• DJIA: +9.6% YTD

Reviewing today's data:

• Weekly MBA Mortgage Applications Index -2.7%: Prior -2.2%
• June PPI -0.3% (Briefing.com consensus 0.1%); Prior was revised to 0.6% from 1.1%, June Core PPI 0.2% (Briefing.com consensus 0.4%); Prior was revised to 0.1% from 0.4%
  • The key takeaway from the report is that it is an encouraging monthly marker of how the inflation data can improve with a decline in energy prices; however, it also reveals on a year-over-year basis that wholesalers are still dealing with high prices. Net-net, this report conveys the need for more improvement in bringing down wholesale prices, but it was better-than-feared when also factoring in the downward revisions to the prior month.
• July Empire State Manufacturing 15.6 (Briefing.com consensus 8.5); Prior 5.7