Mike Santoli’s market notes: Lower highs for the S&P 500, bond yields recede, a speculative game heats up

Published Tue, Mar 2 20211:29 PM EST

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics. Still in the chop zone below the record highs. Yesterday's pop almost retook last week's losses. But as noted fell short of the area that's capped the market for most of the past month. Nothing too worrisome yet about today's softness, though it does speak to the fragile bid in mega-cap growth stocks and continues the trend of weak reactions to strong earnings. Those factors have restrained the S & P and led to a minor series of "lower highs." Great number from TGT and ZM were sold, the former following a pattern set by other essential retailers and the latter like other work-from-home plays in recent quarters, as traders grapple with the "Can it possibly get any better?" question. The market response to earnings has been more negative, in aggregate, than in any quarter since 2000. Part of this just means stocks are up ~80% in less than a year, and that 2021 profit growth is simply presumed. Also a bit like 2010 – the other post-recession year when EPS forecasts were last proven way too low but which saw a 15% S & P 500 correction over a number of months as the market digested the massive run off the bear-market low of March 2009. Bond yields further receding today, though staying above their breakout levels. Chatter about the Senate paring down the fiscal package might be a slight influence here. No help to the secular-growth names (cloud, software, AAPL all down more than 1%). Yes, they were all up big, but this market has a strong short-term preference for stocks geared to the "economy unleashed" story. Financials holding up fine even with the ebb in yields. The minor stalling out of the broader market is not slowing the speculative financial-engineering game. More SPAC deals today, including a roll-up of financial-clickbait and research providers (one of them Whitney Tilson). And Dave Portnoy promoting the ETF $BUZZ that will algorithmically chase the most memed-about stocks on social media. This market remains a distinctive blend of early-cycle and late-cycle features. Market breadth is well-mixed, a slight downside skew. There are more than 100 new 52-week lows on the Nasdaq, which is a pretty decent-sized crop and shows wear and tear on tech/small-caps. The VIX is holding steady. Lots of talk that institutions are well-hedged and doing so mostly with S & P index puts in the absence of any appetite to scorn Reddit by shorting individual stocks. VIX still slightly elevated vs overall market conditions, but neither the VIX futures curve nor credit spreads are showing much buildup of stress.

Traders on the floor of the New York Stock Exchange

Source: NYSE

This is the daily notebook of Mike Santoli, CNBC's senior markets commentator, with ideas about trends, stocks and market statistics.

Still in the chop zone below the record highs. Yesterday's pop almost retook last week's losses. But as noted fell short of the area that's capped the market for most of the past month.