Stocks got off to a rough start on Monday, but beneath the surface, the selling pressure was even worse than the move in the S&P 500 let on.
As a team of analysts at Bespoke Investment Group pointed out in a note shared with MarketWatch early Tuesday, stock-market breadth was truly terrible on Monday. This was evident by the nearly 0.9% drop in the S&P 500 equal-weight index.
The net advance-decline line stood at negative 338, although a rally in shares of Nvidia Corp. helped limit losses for the cap-weighted index.
Given such broad-based losses, it’s remarkable that the S&P 500 didn’t take a bigger hit. As Bespoke showed, Monday was just one of two days since 1997 where the advance-decline reading was between -350 and -300, and the S&P 500 was down less than 0.25%.
Many have warned that signs of deteriorating breadth would help to temper their enthusiasm for stocks. Now, we wait to see whether this was a one-day phenomenon, or the start of a broader trend, as rising Treasury yields appear to be becoming a problem again for stocks.
U.S. stocks were pointed toward a lower open on Tuesday.