The stock market was able to retrace 2/3 of what it lost on Tuesday during yesterday’s trading. It was actually a better day until there were 20 minutes left before the closing bell. At 3:40pm, the S&P had retraced 75% of its previous day decline…when Reuters reported that Beijing had lowered expectations for progress on any trade deal this week. That news turned a 1.25% gain into a 0.91% advance…and it took the breadth in the S&P 500 index from 14 to 1 positive to just over 6 to 1.
However, it was still a good day for stocks. Although the breadth came down late in the day, 6 to 1 positive is still quite positive. All eleven S&P groups closed in positive territory…and two other leadership groups (the Transports & the semis) both rallied more than 1%. If there was one disappointment, it was the underperformance of the Russell 2000 index. It rallied 0.47%, but since that is still a decent advance, we cannot say that this was the kind of outlier that raises a big red flag.
(BTW, the volume fell to only 2.2bn shares, but that decline almost certainly had more to do with the holiday than a lack of buying interest. FYI, although the volume during Tuesday’s decline was higher than it was on the previous day, it was still only 2.75bn that day. So the rise in volume on Tuesday and its decline yesterday was not a very compelling development.)
Needless to say, the trade negotiations are going to be front and center for investors over the next two days…and any news/tweets/leaks on this subject will dominate the movements in pretty much all of the markets for the rest of this week. What in the world ...