Stocks fell today, with headlines surrounding Nvidia (NVDA) weighing on the market. The decline was relatively modest, with the S&P 500 falling just 35 basis points. For the most part, the equity market continues to churn, with money rotating between different groups of stocks. The equal-weighted S&P 500 ETF (RSP) fell 90 basis points, so the headline index could have performed much worse. However, strength in a handful of hyperscalers helped keep the cap-weighted index relatively stable.
The SPY-to-RSP ratio continues to churn, but so far it has bounced off support, suggesting SPY is once again outperforming RSP. To me, that indicates mega-cap technology and AI-related stocks are leading the market again.
The bigger moves today were actually in the bond market, with the 10-year Treasury yield rising 13 basis points to finish the day at 5.13%. The federal budget deficit for October came in at $404 billion, which is unlikely to help matters as government debt continues to grow.
The 10-year yield is currently bouncing off an uptrend that dates back to late February and also appears to have broken out of a bull flag. Both are bullish technical developments for yields, suggesting that a move toward the 5.60% area is possible.
The US 2-year Treasury yield has also broken out, rising 14 basis points today to 4.89%. It appears to have broken free of either a bull flag or a falling megaphone pattern, suggesting that a move above 5% would not surprise me at all.
The Dollar Index is showing a similar pattern, with a breakout now taking shape. The sharp, nearly straight-line decline from April 2025 appears to be retracing, which could take the DXY back toward resistance at 103.5 and potentially as high as 104.60.
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