Small Business Optimism Rebounded Slightly

Small Business Optimism - Another Rally Tuesday

The stock market has almost recovered all the losses from the minor correction last week. On Tuesday, the S&P 500 increased 0.3%, Nasdaq increased by 0.44%, and Russell 2000 was up 6 basis points.

Just like what happened 3 times last fall, the S&P 500 has had trouble around the 2,800 mark. It is currently 8.48 points away from 2,800. I usually don’t pay much attention to these round levels. But it’s notable how this area has caused weakness 4 times in the past few months.

S&P 500 is now up 11.36% year to date as it is very close to its 2019 high. CNN fear and greed index oddly fell 1 point to 58 even though stocks were up.

That’s even with the VIX falling 3.91% to 13.77. Best 2 sectors on Tuesday were the utilities and healthcare which increased by 0.62% and 0.67%. Utilities did well because Treasuries rallied.  

Only 2 sectors were red on Tuesday. Consumer staples fell 2 basis points. Industrials fell 0.91% as Boeing stock fell 6.15%.

It’s interesting how Boeing was in the worst possible shape to deal with this negative catalyst. It was extremely overbought before this plane crash. Its stock was having the best start to the year for a Dow firm since Microsoft in 2001. It was due for a pullback. It’s very unfortunate how this happened.

The industrials sector won’t outperform as it did in the first 2 months of the year if Boeing continues to underperform.

Small Business Optimism - Yield Curve Flattens

Even though the stock market rallied, the treasury market also rallied. That has been the case for most of the year. Treasuries have rallied partially because inflation has fallen.

That’s great for stocks. However, one must wonder how long this stock market rally can last with bond yields this low. To me, it looks like bonds have a better chance of being correct. There is an economic slowdown already underway. To be clear, treasuries being correct doesn’t mean a recession is coming soon.

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