Closing Bell: Markets Struggle to Break 5-Week Slump as Volatility Backwardation Signals Ongoing Stress

• Gains faded despite stocks moving higher premarket, with crude oil staying above $100
• Software outperformed as investors move towards “fiduciary AI”

 Stocks tried to rebound Monday, but the move lacked conviction as Wall Street remained stuck in a five-week slide. The S&P 500 (SPX) stayed below its 50-week moving average, a former support level that now appears to be acting as overhead resistance. With crude (/CL) holding above $100 and volatility still elevated, dip buyers remain cautious.

The major indexes opened higher, but gains faded as investors continued to weigh rising energy costs, geopolitical risk, and a difficult inflation backdrop. Rather than signaling a durable turn, Monday’s action felt like another hesitant bounce in an unstable tape.

The market’s inability to reclaim key technical levels remains a concern. Until that changes, rallies are likely to be met with skepticism.

Technology showed growing internal divergence. Semiconductors remained under pressure as supply chain concerns and fading AI hardware momentum weighed on the group. Software, however, outperformed, with investors rotating toward higher-margin, recurring-revenue names tied to the emerging “fiduciary AI” theme.

Defensive areas also stayed in focus. Gold edged higher, while energy stocks remained supported by firm crude prices and the ongoing geopolitical risk premium.

Treasury yields softened modestly, offering some support to equities, though the benefit was limited by oil’s late-session strength. The U.S. dollar remained firm, reinforcing the broader defensive tone across asset markets.

Spot VIX stayed above 30 while the 3-month VIX remained lower near 28, leaving the volatility curve in backwardation. That inversion is a bearish signal, showing investors are pricing more immediate turmoil than longer-term calm. Until that normalizes, the market is unlikely to get a convincing all-clear.

Tomorrow’s Economic Data:

• 9:00 AM ET: Case-Shiller Home Price Index, FHFA House Price Index
• 9:45 AM ET: Chicago PMI
• 10:00 AM ET: Consumer Confidence, JOLTS
• 12:00 PM ET: Fed’s Goolsbee Speaks
• 1:10 PM ET: Fed’s Schmid Speaks
• 3:00 PM ET: Fed’s Barr Speaks
• 5:10 PM ET: Fed’s Bowman Speaks

Tomorrow’s Earnings

• Premarket: MKC, FDS
• Postmarket: NKE, PVH, RH, PLAY

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