Closing highs rested on a broad base
In Tuesday's session the S&P 500 rose 1.8 per cent to close at 7,736.52 and the Dow Jones Industrial Average rose 1.7 per cent to 54,085.88, both record closes, while the Nasdaq Composite gained 2.6 per cent to 26,584.99. Volume reached 18.89 billion shares, above the 17.33 billion average of the last twenty sessions.[1]
The advance was not confined to a narrow group: advancers beat decliners by 2.84 to 1 on the New York Stock Exchange and by 2.89 to 1 on the Nasdaq. Communication services gained 2.9 per cent, industrials 1.9 per cent and consumer discretionary 1.8 per cent, while energy fell 1.3 per cent. Volume and breadth arriving together separate this session from a jump produced in a thin market.[1]
The price of protection rose in the same session
As the indices set records, the VIX volatility gauge rose 4 per cent to 16.50. The two moving up together in one session is an unusual pairing: equities priced the good news while the options side declined to mark down the cost of protection. One explanation lies less in the session than in the calendar; the same summary points to employment data due Friday and to the Strait of Hormuz talks. A rival explanation is available too: 16.50 sits in a historically low zone, and a 4 per cent rise from there is a small move in absolute terms.[1]
The session's second leg was in oil. West Texas Intermediate crude fell 5.7 per cent to 75.77 dollars and Brent fell 5.3 per cent to 79.36 dollars, leaving energy as the only major sector down on the day. A cheaper input helped equities, while the diplomatic headline producing that discount is also the source of the uncertainty keeping hedging demand alive. The observable test is simple: if the index holds above 7,736.52, watch whether the VIX returns below 16.50.[1]