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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.
Futures point to a sluggish start to trading today as S&P 500 futures are slightly lower and the Nasdaq is down about 0.3%. The modest losses come as crude oil prices rally over 2%, putting WTI at just under $93 and on pace for the highest close since early June. Treasury yields are modestly lower, though, with the 10-year yield down 2 bps to 4.78%. Gold and Bitcoin are both higher by between 1% and 2%.
In Asia, stocks were mixed, with no major index down more than 1%. The KOSPI was up 0.3% while the Nikkei fell 0.2%. In Europe, it’s a similar picture as the STOXX 600 is up 0.2%, with stocks in Spain leading the rally with a gain of 0.4%.
In the US today, there’s a good amount of data, including jobless claims, Nonfarm Productivity, and Unit Labor Costs at 8:30, and then PMIs for the Services sector at 9:45 and 10 AM.
As the calendar has transitioned from August to September, we’ve seen a significant deterioration in market breadth. The S&P 500’s 10-day A/D line has dropped to its most negative levels since May, and the cumulative A/D line is rolling over.
One big contributor to the weakness has been the Industrials sector. Over the last week alone, the sector has been the worst-performing S&P 500 sector, declining over 4%, while the S&P 500 is basically flat. The weakness in the sector has been broad-based. Of the sector’s 83 components, the average performance over the last week has been a 4.2% decline, and just four stocks are higher. Of those four gainers, only one (Deere, DE) is up more than 1%.
The decline in the sector has taken it from overbought levels (1+ standard deviation above 50-DMA) to extreme oversold territory (2+ standard deviations below 50-DMA) in two weeks. Whereas the sector was right at all-time highs two weeks ago, it’s now testing its 200-DMA.
From a longer-term perspective, the Industrials sector is already showing some disrepair. As shown in the chart below of the sector’s performance since the start of the bull market, this week’s decline has taken the sector’s price right below the uptrend line in place since the tariff-tantrum lows in April 2025. Further downside weakness in the sector would not only do notable damage to the short-term picture (below the 200-DMA), but it would also damage the sector’s longer-term foundation.
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