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Today’s trading session was choppy. It started with optimism driven by NVIDIA’s strong performance following news from Foxconn’s reported revenue and anticipation of Jensen Huang’s remarks at CES. However, the enthusiasm faded as higher interest rates began to weigh on most sectors outside technology.
The S&P 500 finished up 55 basis points. It had been up nearly 1.25% earlier, but those gains gradually faded throughout the afternoon, starting around 11:45 AM. Market breadth also deteriorated significantly as the day progressed. What began as decisively positive breadth shifted negative by the end of the day. On the Bloomberg 500, 258 stocks closed down, compared to 239 stocks that were up.
NVIDIA was the standout story, gaining 3.5% and accounting for 40% of the Bloomberg 500 index’s gains—a proxy for the S&P 500. Technically, there wasn’t much notable in the S&P 500’s performance.
It climbed as high as 6,020, which wasn’t a key resistance level. Interestingly, it didn’t reach 6,035, which would have filled a gap. By the end of the session, the index managed to close above its 50-day and 10-day exponential moving averages, but today’s weak price action leaves uncertainty for tomorrow.
On the NYSE, breadth declined sharply, with 233 more decliners than advancers by the close. Earlier in the day, breadth had been positive by about 800 issues but reversed significantly.
This decline in breadth dragged the S&P 500 Equal Weight Index (RSP) down, giving back its gains to close down seven basis points. Less influenced by NVIDIA, the Dow finished the day down six basis points. Notably, the Dow failed to hold above its 10-day exponential moving average, closing below it. Without NVIDIA, the market appeared much weaker overall.
Breaking down performance by sector, technology outperformed, with the XLK up 1.25%. Meta was another strong performer in communications. Outside of tech, energy, financials, industrials, staples, and utilities declined. Health care was flat, and consumer discretionary edged higher, primarily due to Amazon. Outside the “Magnificent Seven,” there wasn’t much strength to note. As measured by the HGX, the housing sector briefly touched its 10-day exponential moving average before closing down 30 basis points.
Much of the day’s volatility likely stemmed from interest rates bouncing around due to mixed headlines regarding tariffs. The 30-year yield rose 3.5 basis points to 4.85%, a new high since November 2023, while the 10-year yield climbed two basis points to 4.63%, nearing a breakout level.
Looking ahead, tomorrow’s 10-year auction will be more significant than today’s mediocre 3-year auction. We’ll also see key data, including JOLTS, ISM, and ADP numbers. With markets closing on Thursday, attention will turn to Friday’s BLS report, which could have a substantial impact on the market.
Credit spreads remain stable, with the CDX High Yield Credit Spread Index flat, but the VVIX, a measure of implied volatility for the VIX, rose, suggesting we might soon see the VIX and credit spreads rise.
-Mike
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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