The stock market showed mixed performance today, with the Dow lagging behind and Small Caps leading the way, while the S&P and Nasdaq saw modest declines. The morning drop was reportedly triggered by news from the WSJ about Russia’s suspected plot to send incendiary devices on US-bound planes, but the market quickly bounced back.
The main theme of the day was profit-taking on the “Trump Trade” following the strong performance of the Kamala basket in recent weeks.
The VIX ended the day at a notably elevated level, with the volatility term structure showing extreme inversion ahead of upcoming event risks this week.
Speculators in the VIX futures market are currently net long for the first time since early 2019, indicating a shift in market sentiment.
Mega-Cap Tech stocks experienced another decline today but found support at current levels.
In the bond market, yields tumbled after disappointing payroll numbers, with the long end outperforming the short end. Despite this, yields are still slightly higher than Thursday’s close.
The dollar continued to weaken, while the Mexican Peso reached its weakest level since September 2022, possibly indicating a “Trump Trade” in progress.
Gold prices remained steady, just above the $2730 support level, while Bitcoin fell after hitting record highs last week.
Oil prices rallied, erasing last week’s losses on geopolitical tensions between Israel and Iran.
Despite rising oil prices, pump prices are testing multi-year lows ahead of the election, raising questions about potential market factors at play.
Looking ahead, the focus will be on USA Sovereign Risk tomorrow, with the market watching for any impact from a divided government on market stability.