This is the daily notebook of Mike Santoli, CNBC’s senior markets commentator, with ideas about trends, stocks and market statistics. This is a flattish day of waiting for the week’s known catalysts (Federal Reserve Chair Jerome Powell’s speech, personal consumption expenditures and jobs data) outside of some follow-through weakness in Apple on more iPhone sales worry. The market continues to feature range-bound action with weak momentum and some technical challenges above, while supported by a multi-week easing of financial conditions and firmness in the underlying economy. The recent sideways chop still looks consistent with a benign consolidation of the October-November rally, but just a couple percent further downside would likely embolden the “sell all rallies” crowd by appearing to be another failure at a lower low versus the prior peak in August. We’re not yet in breakdown mode, in other words, as the S & P 500 remains above its 20-day average (near 3,900). At this point, the market is holding the consumer price index-related gap higher from earlier this month, though barely. There is nothing inconsistent with a messy, anxious months-long bottoming effort, either. This is why they play the games, as they say – this debate can’t be settled on paper. The AAPL agita related to China production, iPhone sales and atmospheric turbulence related to Elon Musk picking a fight over the App Store is all just draining some of the big “safety premium” in the stock. Here’s AAPL versus tech and mega-cap growth (NDX) over the past year. Much of the weakness is likely the exit from money that previously assumed AAPL was a haven. It has been, of course. It’s done that job well, but this makes the stock vulnerable to scares. Crude oil is firming near the bottom of its year-to-date range allowing energy stocks to reclaim about half of Monday’s drop. Financials are steady. There’s very much another value-over-growth tone: Month-to-date S & P 500 value is outperforming growth by three percentage points and by more than 20 so far this year. It seems like a huge run but barely makes a dent in the decade-plus lead built up by growth coming into 2022. The two-year Treasury yield holding near 4.5%, well above recent lows around 4.3% hit on CPI day. Clearly the market is somewhat wary of Powell’s message on Wednesday, but it’s hard to see the market being as vulnerable to a hawkish assault as it was in August. The Fed has done a lot since then and its more balanced message (rates will go a bit higher but maybe slower and then stay there a while) seems more clearly reflected in bond-market pricing. Breadth is positive despite the red S & P 500. The equal-weight version of the index is slightly green, but overall indecisive action. Yields are little changed. However, there’s some longer-term Treasury selling reportedly related to Amazon marketing a five-part debt sale . Credit markets are steady against the supply. VIX is hanging near 22, up off the low and very much in an inverse range to that of the S & P 500 for the past several months.
