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

February CPI was just released and while the headline reading was right in line with forecasts, Core CPI came in at 0.4%, just ahead of the 0.3% consensus forecast. While the initial reaction was a sell-off in equity futures, we’ve seen a bounceback since then as treasury yields are down on the day. The reason? Supercore CPI declined. We’ll see how things shake out as the market digests the data.  The biggest thing to keep in mind is that even if the hotter data pushes out the timetable for rate cuts, the Fed still isn’t hiking.

There was a period earlier this year where breadth in the market was narrowing in terms of the percentage of stocks trading above their 50-day moving averages, but as shown in the chart below, the last few weeks have seen a notable upswing. After bottoming out at less than 52% on 2/13, there’s been a steady increase in the percentage of stocks trading above their 50-DMA with yesterday’s level reaching just under 80% (79.5%). It’s still below the 90%+ levels we saw earlier this year, but 80% is a healthy number.

At the sector level, Technology has a slightly higher percentage of stocks trading above their 50-DMAs (82.8%) than the overall market, but it’s no longer leading. At the top of the list now, over 96% of stocks in the Materials sector are above their 50-DMA along with 91% of stocks in the Energy sector. In other words, it’s been a good run for commodity-related stocks.  At the other end of the list, just half of the stocks in the Communication Services sector are above their 50-DMA, and it is also the only sector where less than two-thirds of the components are below that level.

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