Higher bond yields are adding market volatility but not financial stress.
Key to last week’s shift in the weight of the evidence from bullish to neutral was the continued deterioration in breadth trends, especially in the US. On everything except the shortest of time frames we continue to see more new lows than new highs. Over the past two months, there have only been two trading days on which the NASDAQ saw more new highs than new lows. Almost half of the sectors in the S&P 500 (5 of 11) are down over 8% for the year already..
Only two sectors are in positive territory for the year and for one of those it is just barely. The one sector that is up meaningfully (Energy, +25% YTD) is such a small part of the S&P 500 that excluding entirely would drop the indexes performance by less than one percentage point (the S&P 500 is down 5.8% YTD, the S&P ex Energy is down 6.6%).
