Yesterday’s trading session was choppy. It started with optimism driven by NVIDIA’s (NASDAQ:NVDA) 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 yesterday’s weak price action leaves uncertainty for today.
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 (NYSE: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 (NASDAQ:META) was another strong performer in communications. Outside of tech, energy, financials, industrials, staples, and utilities declined.
Healthcare was flat, and consumer discretionary edged higher, primarily due to Amazon (NASDAQ:AMZN). 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, today’s 10-year auction will be more significant than yesterday’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.