Stocks bounced back in the last two hours of trading, but it was a dreary session of mixed action on Tuesday. Breadth finished the day close to even, but all the major indices finished with lasses. Big-cap technology stocks were a major drag, with the Nasdaq 100 losing about 0.6%. There was some strength in energy and industrials, but the biggest gainers were China-related names Alibaba (BABA) , PDD Holdings Inc. (PDD) , and JD.com (JD) .
The market's problem is that there is a lack of clarity. For a few days, the bulls were chasing big-cap technology and hoping that leadership there would drag the rest of the market higher, but financials and uncertainty about what the Fed will do next were too much baggage.
Bonds have been struggling, and the odds of potential interest rate hikes keep shifting. There are louder predictions that we are on the cusp of a recession, but the market doesn't appear to be ready to fully embrace that possibility.
The challenge for traders is that there isn't any strong trending action. There is some short-term volatility for day traders, but for traders looking for trend-following trades, there are limited opportunities.
Unfortunately, there is not much news flow right now, so we will likely continue to be stuck in the mud. On Friday, we have the personal consumption expenditure report, which is the Fed's favorite inflation measure, so that debate will heat up again.
The indices are holding on to some support, but that is about all that they are doing.
Have a good evening. I'll see you tomorrow.