See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“The most terrifying fact about the universe is not that it is hostile but that it is indifferent.” – Stanley Kubrick

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

US equity futures were higher earlier but have given up those gains (what else is new) as we approach the release of the February Non-Farm Payrolls report. Overnight and this morning, we’ve seen global weakness, although they haven’t seen nearly the level of weakness this week that US equities have. Germany and Japan were notable losers with declines of about 2%, while the STOXX 600 is down less than 1%. Treasury yields are lower as the 10-year sits under 4.25%

For the week, the S&P 500 is on pace for a decline of 3.6%, while the Nasdaq is on pace for a loss of over 4%. For both indices, this week is likely to be the worst week since the week ending 9/6, and for the Nasdaq, it will be the third straight weekly decline of 2%+, which would be the longest such streak since late July/early August of last year.

Certainty has been lacking lately, but efficiency has been abundant on the part of the market in pricing that in. The chart below is from page two of the Morning Lineup and shows the S&P 500’s 50-day moving average (DMA) spread, as measured in standard deviations. The S&P 500 has gone from firmly overbought to ‘extreme’ oversold territory in only eight trading days. These kinds of swift moves have been very uncommon over time.

It’s not just the S&P 500 that has moved deep into oversold territory. The snapshot below from our Trend Analyzer shows that as of yesterday’s close, every major US Index ETF except the Dow (DJIA) was at ‘extreme’ oversold levels (2+ standard deviations below their 50-DMA).

See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“The greatest danger for most of us is not that our aim is too high and we miss it, but that it is too low and we reach it.” – Michelangelo

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Beggars can’t be choosy, but is a rally that lasts just one session the best we can do these days? As good as days like yesterday feel during waves of selling, when most of those gains get washed away before the next session’s opening bell, it’s grueling.  Futures for all the major indices are down over 1% this morning on no specific news other than continued uncertainty related to tariffs, trade, and almost everything else. While administration officials periodically dangle a carrot to the market, the threat of a much broader blanket of tariffs coming within a month looms larger.

Despite the uncertainty, markets will still open for trading at 9:30. Before that we’ll get several economic indicators, including Non-Farm Productivity, Unit Labor Costs, and most importantly jobless claims at 8:30. Last week’s initial claims report came in 21K ahead of expectations, and if there’s another upside surprise in that reading, look for the stagflation chatter to pick up in intensity. Adding to concerns over the employment picture, Challenger, Gray, and Christmas reported this morning that US employers announced 172K layoffs in February, the largest for a single month since July 2020.

It’s been a painful couple of weeks for US equities. As shown in the snapshot below from our Trend Analyzer, both the S&P 500 and Nasdaq 100 remained in oversold territory even after yesterday’s bounce, and they’re both down roughly 2% over the last week.  The action in US equities stands in stark contrast to international equities, which are mostly higher over the last week and at varying degrees of overbought levels. European equities, as tracked by the ETF VGK, are up over 15% YTD and headed into today at ‘extreme’ overbought levels (2+ standard deviations above 50-day moving average).

See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“I am convinced that there is nothing they admire so much as strength, and there is nothing for which they have less respect than for weakness” – Winston Churchill

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

The term ‘weakness’ has a lot of applicability to the current market environment. There has been little positive to say about how equities have performed since the S&P 500’s record high two weeks ago. Has it only been two weeks? 

With the S&P 500 finishing the day down by more than 1.2%, the only positive thing to say about yesterday was that the 200-day moving average (DMA) provided some level of support. After trading down near that level in the morning, the S&P 500 bounced through the afternoon and even briefly peeked into positive territory. The good times didn’t last long. With President Trump being more of a mush on stock prices lately than Fed Chair Powell, there was a barrage of selling into the close ahead of last night’s address to Congress.

This morning, equity futures are putting in a valiant effort with gains, but they’re already well off the overnight highs and barely higher. Where they finish is anyone’s guess. Treasury yields are modestly higher, crude oil is back down to $67 per barrel, gold is marginally higher, and Bitcoin is surprisingly back above $90K.

European markets have bounced back from yesterday’s weakness following news in Germany after yesterday’s close that the country would increase deficit spending, and that has 10-year German Bund yields surging over 20 bps to their highest levels in over a year.

On the economic calendar, ADP Payrolls were just released, and the headline reading came in at 77K versus forecasts for an increase of 148K. With market concerns shifting from inflation to the health of the economy, this report is likely to raise some concerns. It’s important to remember that ADP has often varied widely from Non-Farm Payrolls, but the miss will put added significance on tomorrow’s jobless claims report. Outside of that, the only two other reports are ISM Manufacturing and Factory Orders at 10 AM.

While the 200-DMA provided support for the S&P 500 yesterday, we’d caution about getting too excited. Remember, it was only Friday that the Nasdaq ‘successfully’ tested its 200-DMA, but that support lasted less than one trading session.

The short-term direction of the market is anyone’s guess, but from a longer-term perspective, we’d note that as extreme as the last two weeks may seem in the moment, the market has been there and done that. Since WWII, there have now been 64 pullbacks of 5%+ from an S&P 500 record high. This decline seems especially swift as it took the S&P 500 less than two weeks to reach the 5% milestone, but we would point out that a third of the prior 63 pullbacks reached the 5% level just as fast or even faster. For all 63 prior streaks, it took an average of less than four weeks (25 calendar days) to fall 5% from an all-time high.

The top chart below shows every time the S&P 500 experienced a 5% pullback from an all-time closing high, and the second chart shows the same occurrences over just the last ten years. Some of these pullbacks expanded to become full-fledged extended bear markets where, in some cases, the S&P 500 lost a significant percentage of its value. In most cases, though, the declines were short-lived, and you’d have a hard time even remembering what caused them in the first place.

In his speech last night, President Trump told Congress, “There’ll be a little disturbance, but we’re OK with that.” For everyone invested in the stock market, how little is little?