[BRIEFING.COM] The stock market finished the Tuesday session on an upbeat note with small caps pacing the rally. The Russell 2000 advanced 0.8%, while the S&P 500 added 0.5% with eight sectors ending in the green. 

 

Although geopolitical concerns factored into the modest retreat on Monday, the worries were cast aside today after separatist forces in eastern Ukraine handed over black boxes from MH17 to Malaysian authorities and Secretary of State John Kerry began working on brokering a cease fire in Gaza. 

 

Furthermore, the sentiment was boosted by a slate of mostly better than expected earnings. Notably, Chipotle Mexican Grill (CMG 659.77, +69.84) soared 11.8% after beating estimates and surpassing comparable restaurant sales growth expectations. However, McDonald's (MCD 96.27, -1.28) painted a less upbeat picture with its stock falling 1.3% in reaction to below-consensus earnings and revenue. Elsewhere among consumer discretionary components, Comcast (CMCSA 54.63, +0.81) added 1.5% after reporting better than expected results. 

 

While the discretionary space (+0.5%) contained a fair share of outperformers, energy (+0.8%) and health care (+0.8%) sectors hovered near the lead throughout the session. Energy rallied even as crude oil fell 0.5% to $102.35/bbl, while health care received support from biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 253.68, +2.82) advanced 1.1%. 

 

There was an added headline stir in the health care space as separate judicial rulings at the federal appellate level contradicted each other regarding the legality of subsidies received to help pay for health care via the federal exchanges. The initial ruling from a federal appeals court panel covering Washington D.C. ruled 2-1 that those subsidies are illegal. Soon thereafter, the 4th U.S. Circuit Court of Appeals ruled 3-0 that the subsidies are legal. 

 

Despite the conflicting rulings, the sector held its ground, implying a belief that the initial ruling would not translate into law anytime soon (if at all). The second ruling helped validate that belief and likely set the stage for a review of the rulings by the full circuit court in both areas and potentially the Supreme Court. Unlike health care, other countercyclical sectors could not keep up with the broader market. The telecom services sector (+0.3%) eked out a slim gain, while consumer staples (-0.2%) and utilities (-0.2%) finished in the red. 

 

The consumer staples sector lagged amid weakness in the shares of Coca-Cola (KO 41.19, -1.21). The Dow component lost 2.9% despite reporting a one-cent beat. Like Coca-Cola, another Dow component-United Technologies (UTX 110.86, -2.12)-also settled lower despite beating estimates. 

 

The relative weakness among blue chip listings had little impact on the performance of high-beta names. Chipmakers (PHLX Semiconductor Index +0.7%), biotechnology (IBB +1.1%), and transport stocks (Dow Jones Transportation Average +1.1%) all finished ahead of the broader market, while the Russell 2000 regained its 50- and 100-day averages. 

 

Treasuries retreated in the early morning, but reclaimed their losses during the day. The 10-yr note ended flat with its yield at 2.46%. 

 

Participation was on the light side with less than 600 million shares changing hands at the NYSE. 

 

Economic data included CPI, FHFA Housing Price Index, and Existing Home Sales: 

Consumer prices increased 0.3% in June, down from a 0.4% increase in May, which matched the Briefing.com consensus estimate 

As expected from the June PPI report, a strong increase in energy prices, up 1.6% in June, was the main catalyst for the overall increase in consumer prices. That was the largest increase in monthly energy costs since December 

Gasoline costs rose 3.3% after increasing 0.7% in May 

Food prices moderated a bit in June, increasing only 0.1% after growing by at least 0.4% per month since February 

Excluding food and energy, core CPI increased 0.1% in June after increasing 0.3% in May, while the consensus expected an increase of 0.2% 

The May Housing Price Index from the FHFA rose 0.4%, which followed a revised increase of 0.1% observed during the prior month (from 0.0%) 

Existing home sales increased to 5.04 million SAAR in June from an upwardly revised 4.91 million SAAR (from 4.89 million SAAR) in May, while the Briefing.com consensus an increase to 5.00 million SAAR 

This was the first time sales exceeded 5.00 million SAAR since October 2013. Still, sales are down 2.3% year-over-year 

Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET. On the earnings front, participants will be reacting to results from Apple (AAPL 94.72, +0.78), Boeing (BA 129.74, +1.44), and Microsoft (MSFT 44.83, -0.01), among others. 

S&P 500 +7.3% YTD 

Nasdaq Composite +6.7% YTD 

Dow Jones Industrial Average +3.2% YTD 

Russell 2000 -0.7% YTD

Nasdaq +31.31 at 4456.02... NYSE Adv/Dec 2090/950... Nasdaq Adv/Dec 1900/904.