A late bounce prevented a close at the lows of the day for the indexes, but investors were growing weary of the debt ceiling issue and decided to reduce some exposure.
The big-cap technology names are still enjoying some relative strength, but breadth was around 1,800 gainers to 6,250 decliners, and the number of new 12-month lows inched back over 200.
The scenario that many investors have been anticipating was a last-minute debt ceiling deal that created a sharp spike that they would be able to sell into. The market has been holding up quite well and has not been too concerned about the issue, but the mood shifted starting Tuesday afternoon, and now there is fear that the debt ceiling issue will drag out even longer. The risk of default has increased slightly.
The other news of the day was the Fed meeting minutes. Fed members are waiting to see the lag effect of the hikes they have already issued and are still waiting to see more data. There is currently about a 70% chance the Fed will not hike at its next meeting in June, but the question is whether that is going to be a pause or a pivot. The bulls are convinced that it is a pivot, but Fed members are adamant that no cut will occur this year.
There is some technical deterioration out there and a lot of disinterest. It is a very poor trading environment and will likely stay that way until we have some news flow to shake things up.
Have a good evening. I'll see you tomorrow.