City A.M. TV: Daily Market Snapshot (video)
Recent key leadership areas of the US market were weak yesterday. That included the Russell 2000 (-1.7 per cent), the S&P600 (the small caps: -1.7 per cent) and certain transportation indices (i.e. DJ Transports and NASDAQ Transports -1.6 per cent & -2.1 per cent, respectively).
Tech was one of the areas of relative strength with the S&P500 IT sector (+0.8 per cent) and NASDAQ100 (+0.5 per cent) both closing higher.
The key question, therefore, is whether that marks the start of an ongoing rotation back into tech/growth? As we highlight in this brief clip, the answer will hinge on the direction of bond yields – as well as the current message of our short term trading models.
The Fed’s post meeting statement and press conference tonight will also be key in that respect (the announcement is due at 6pm London time, followed by a press conference at 6:30pm). Any comments by Powell regarding bond yields will be watched closely and, as always, these meetings generate a two way risk for equities. Often, though, markets rally in the days and weeks leading up to a Fed meeting – and then top on the news.