Shares are down slightly for the day as a whole, although some declines are masked by the strength of Nvidia (NASDAQ:). Thus, the market capitalization-weighted index rose only 11 basis points, while the equally weighted index fell about 50 basis points. For its part, the index, without Nvidia, fell 30 basis points.
In effect, Nvidia has distorted the index and made the S&P 500 useless in some ways. When a stock can offset an index by a considerable amount on a daily basis, that index does not accurately indicate the overall market. The S&P 500 had risen almost 6 points, while Nvidia had contributed a gain of almost 16 points. Therefore, if Nvidia had not risen almost 5% that day, the index would have dropped about 10 points. Now if this happened just once it wouldn’t be a big deal, but it seems to happen almost daily.
It is what it is, but if you don’t take these things into account and don’t think about their possible repercussions, you are overlooking an important risk factor to consider. The data shows that many more shares fell throughout the day than those that rose.
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Dollar falls after weak data
For its part, it has fallen sharply over the course of the day, after the “weaker” than expected report from the . The ISM manufacturing report has been quite weak for a long time; Using it to measure the health of the economy has not worked well for some time.
Yesterday’s reading suggests that real GDP is growing at around 1.7%, which is fine but certainly not recessive. It probably suggests that the dollar has fallen too much, but the rest of the week’s data will be just as important.
Crude oil prices approach $70
Still, rates fell sharply, mainly due to the decline in oil. It fell after news that OPEC production cuts would be extended until the end of the year, but that some of the voluntary reductions could be eased in October.
Oil prices fell 4%, crashing to around $74, and now face a major test of resistance. A break of the $74 support level could trigger an even further decline to $70. Technicals suddenly look less favorable than when oil hit the $80 level early last week.
The weight falls
It has not been a great day for the Mexican peso, which has seen it rise more than 4% after the elections. The peso is more of a risk indicator than anything else, and yesterday’s move higher makes me wonder what will happen next and whether CDX high yield credit spreads and the one-month implied correlation index will rise in solidarity.
At least over time, the S&P 500 and USD/MXN have had an inverse relationship, and if that relationship continues, then aftershocks of yesterday’s peso movement could be noted in the coming days.
Because in the end, everything is the same market.
