The S&P 500 rallied by about 75 basis points today, but it remains a market where solid breadth is lacking. Breadth was notably weak in the morning, though it improved slightly as the day progressed. Nvidia emerged as the leading stock, contributing 34% of the day’s gains according to data from the Bloomberg 500 Index, while Broadcom added 15%. This translated to the Bloomberg 500 gaining nearly 15 points, with Nvidia accounting for five points and Broadcom for 2.25 points. By the end of the day, S&P 500 breadth showed 275 stocks advancing versus 225 declining. Trading volume was light, with the SPY ETF trading just 35 million shares, well below the 20-day average of 46 million. S&P 500 futures also saw lower activity, trading only 1.3 million contracts compared to the 1.5 million average.

Short interest volume in SPY and QQQ ETFs showed notable increases in recent days, reaching some of the highest levels since December 2023 for QQQ and March 2024 for SPY. Meanwhile, the 10-year Treasury yield rose six basis points to 4.59%, hitting a new high since its September 17 low. This steepened the yield curve, with the 10-2 spread widening by four basis points to 25 basis points. The Powell Indicator, measuring the spread between the 3-month Treasury yield 18 months forward and the current 3-month yield, rose to +15 basis points, its highest level since November 2022. This suggests the market anticipates higher short-term rates in the future, possibly reflecting expectations of Federal Reserve rate hikes. With today’s light trading and technical levels holding steady, the market awaits further developments in the coming sessions.

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