Good morning,
Week by week, volatility has been edging higher. We’re seeing more frequent 1–2% swings in both directions across the major indices — a noticeable change from the steadier tone that characterized much of last year.
Yesterday, U.S. equities tumbled as the tech-led selloff deepened. The S&P 500 fell -1.6%, while the Nasdaq and Russell 2000 each declined roughly 2%. Just a few weeks ago, it took three sessions to produce a 3% pullback — this week, we moved more than halfway there in a single day.
Elsewhere, Treasuries caught a defensive bid with yields falling across the curve. The U.S. dollar was little changed against major peers, while gold and silver — recent leadership areas — saw sharp declines.
This morning’s January CPI report delivered modestly favorable news — roughly a tenth of a percent softer than expected. At least initially, markets appear to be treating the data as a green light for rate cuts later this year under the new Fed leadership. Some might say that feels like an aggressive interpretation of a relatively incremental data point – I would say over-reaction.
Importantly, the internal message from the market remains constructive. We are not seeing the typical warning signs that accompany a market top — at least not yet. For now, this appears to be volatility within an ongoing trend rather than a shift in regime.
Be well,
Mike