The Market Grind: AI Doubt and Limited Strength
Apple performed best on a mixed day for the market.
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It was a mixed day for markets on Tuesday, with the indices trading close to flat on slightly negative breadth. Dip buyers did show up and grab a few Magnificent Seven names, but there was little buying conviction. Apple (AAPL) , which has limited AI capex exposure, performed the best.
Small caps (IWM) dipped early but bounced later in the day. Amazon (AMZN) finally broke its record-long losing streak, but cryptocurrencies continue to struggle, with (IBIT) losing 1.5%.
A Lack of Pockets of Strength
The biggest problem the market faces is that there are so few pockets of strength. Only two stocks — Ulta Beauty (ULTA) and GE Vernova (GEV) — on the S&P 500 finished with a gain of more than 2%. While breadth isn’t terrible, with 45% of names in the green, the gains are very small and are mostly a product of random volatility.
Investors lack confidence, but at the same time, there isn’t enough intense selling to attract traders who want to buy panic. There isn’t any real panic. It is mostly just miserable and frustrating action. I’ve often written that bad markets don’t scare you out, they wear you out. That seems to be the case right now.
The AI Uncertainty Catalyst
Unfortunately, there aren’t a lot of catalysts on the horizon. There is some economic news and earnings coming up, but it is the AI uncertainty that is the primary issue. The situation with hyperscalers' capital spending is widely debated but not resolved.
There isn’t much to do in this environment but to stay patient and wait for opportunities to develop. The easiest way to get in trouble is to make boredom buys or to try too hard to time a bottom.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
