The S&P 500 rallied by about 75 basis points today, but it remains a market with weak breadth. Breadth was notably weak in the morning, though it improved slightly as the day progressed. According to data from the Bloomberg 500 Index, Nvidia was the leading stock, contributing 34% of the day’s gains, while Broadcom added 15%. 
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Despite this, breadth on the S&P 500 started weak and ended the day with 275 stocks advancing compared to 225 declining, reflecting slight improvement. Trading volume was extremely light, with the S&P 500 futures trading only 1.3 million contracts compared to its 20-day average of 1.46 million. 
From a technical perspective, the S&P 500 remains below the intraday highs seen on Friday, hovering around the 61.8% retracement level. We’ll see what tomorrow brings. 
Notably, short interest volume on the SPY ETF has been increasing in recent days climbing to nearly 26 million shares on December 20th. 
Similarly, on the QQQ ETF, short volume rose to 18.9 million on the 20th. These levels are among the highest seen since December 2023 and, for SPY, since March 2024. It’s unclear if this increase is tied to options expiration, but it stands out compared to recent activity. 
Elsewhere, the 10-year Treasury yield rose six basis points to 4.59%, marking a new high since bottoming out on September 17. This movement steepened the yield curve, with the 10-2 spread widening by four basis points to 25 basis points, surpassing the December 19 close of 24.7 basis points. 
Additionally, the Powell indicator—the spread between the three-month Treasury 18-month forward rate and the current three-month Treasury yield—closed at +15 basis points, its highest level since early November 2022. This suggests the market anticipates short-term rates to be higher 18 months from now, potentially reflecting expectations of future Fed rate hikes. 
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