Some concerning activity lies below the surface of a market that has made resilience its hallmark in the face of rising risks this year.
Downside volume on the New York Stock Exchange as a percentage of total volume has surged to 54% and is near year-to-date highs, BTIG technical strategist Jonathan Krinsky pointed out. What’s more, small-cap stocks as measured by the Russell 2000 (^RUT) are down more than 5% from their highs.
Since 1996, this is the 12th time this occurrence has happened, Krinsky wrote.
Forward returns are mixed for the S&P 500 (^GSPC), but for the Russell 2000, losses total about 2.1%.
The activity suggests investors are slowly losing confidence in a market being hit by higher oil prices, rising US Treasury yields, and now likely another Fed rate increase before year-end.
Up to this point, the broader stock market has remained within striking distance of its all-time highs.
The S&P 500 is sitting roughly 3% below its historic record peak of 7,798.99 set on Aug. 13. Meanwhile, tech-heavy mega-caps continue to anchor market stability, leaving the benchmark index up approximately 11.7% year to date.
Two factors underpin this proximity to record levels.
For one, key players across tech delivered strong second quarters and strong outlooks — helping investors digest elevated Treasury yields.
And two, Wall Street remains unwavering in the view that corporate earnings will stay strong into year-end despite much higher oil prices impacting companies and consumers.
As a result, brief pullbacks in stocks continue to be met with selective dip-buying, keeping all three major US indexes anchored within single-digit percentage points of their peak levels.
“The weight of the evidence supports staying aligned with the primary market uptrend,” Truist chief investment officer Keith Lerner said. “Underweight investors should consider adding exposure, with growth areas such as tech presenting a relative opportunity today. We would view a deeper pullback as an opportunity to potentially become more aggressive.”
Brian Sozzi is Yahoo Finance’s Executive Editor, host of the ‘Power Players With Brian Sozzi’ podcast and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
Read the latest financial and business news from Yahoo Finance
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: finance.yahoo.com
