Oil fell sharply as diplomatic hopes improved, easing some of the pressure on yields and the Dollar. Metals recovered, while Bitcoin gave back its weekend bounce. Stocks remained divided: equal-weight shares advanced, but the early recovery in technology faded.
Monday gave us part of the relief discussed over the weekend, with the benefits still unevenly distributed.
Market Commentary
Oil and Treasuries finished the week higher, while metals and Bitcoin lost ground. The Dollar made little net progress, and stocks remained split between weaker technology and firmer equal-weight shares. We enter November with energy costs and growth concerns pulling markets in different directions.
The bullish consolidation we discussed in RSP broke higher on Thursday. Small caps also advanced, while the Nasdaq gave back much of its recovery from the previous two sessions. The divergence remains, but the stronger areas are now making further progress of their own.
The recovery in the earlier leaders has developed further since Tuesday's update. Semiconductors have recovered last Thursday's decline, while equal-weight stocks have stayed near their recent highs. That is the combination we were looking for: technology contributing again without the stronger areas giving back their progress.
The Fed decision did not interrupt the stock market's recovery during regular trading. Treasuries, however, pulled back, and the earnings reaction after the close brought renewed selling in Alphabet. The rally attempt has gained substance. Today will show how it responds to the earnings reports and economic data.
Monday brought a rebound in the earlier leaders. Technology, consumer discretionary and industrials led the advance, while some of the defensive businesses that had been holding up better took a pause.
That fits the possibility of an upside surprise discussed over the weekend. Buying returned to the weaker areas while equal-weight stocks also continued to edge higher.
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