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“Shut your eyes and see.” – James Joyce

Futures are trading higher heading into the opening bell…for now.  It used to be that a positive tone in the futures market would suggest a positive tone to the upcoming trading day, but lately, futures are indicative of the market’s present tone and nothing else.  Close your eyes or step away from the desk for a minute and the picture may look completely different when you get back. Along with futures in the green, bitcoin is trading up 3% and back near or above $39K (depending on when you look), crude oil is down slightly, and the 10-year yield is back up to 1.98%.

The only economic data point on the calendar was weekly mortgage applications which showed a decline of 13.1% compared to last week’s drop of 5.4%. Mortgage applications can be volatile, but last week’s drop was the steepest since April 2020 at the heart of the COVID lockdowns.

Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.

If the S&P 500 was going to bounce one of these days, current levels provide a logical starting point as the S&P 500 closed yesterday just above 4,300 which is a level that has acted as support in the past eight months.  How long that support holds in the current environment remains to be seen.

While YTD performance has essentially been a bloodbath for most stocks in the S&P 500 this year, stocks in the Energy sector have been living in an alternate reality.  With an average YTD gain of 20.2%, stocks in the Energy sector are leading every other sector’s average YTD change by at least 20 percentage points!  Stocks in the Financials sector have managed an average YTD gain of 0.2% this year, but every other sector’s average YTD change is negative.  Sectors that have been the biggest laggards include Technology, Consumer Discretionary, and Real Estate where the average YTD change of each one’s components has been a decline of over 10%.  Even in a traditionally defensive sector like Utilities, its components have already declined an average of 5.7% YTD.

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