Narrowing market breadth may be worrying

Potential risk: Traders are seen working on the floor of the New York Stock Exchange. Investors will be watching US consumer confidence numbers for a read on whether buyers are changing their purchasing habits in the face of high inflation and Covid-19. — AFP

NEW YORK: Investors are scrutinising the stock market’s narrowing breadth and other signs of ebbing risk appetite, as markets digest a hawkish pivot from the Federal Reserve (Fed), soaring inflation and concern over a fresh wave of Covid-19 cases.

Only 31% of stocks in the tech-heavy Nasdaq are trading above their 200-day simple moving average despite the index’s 18% year-to-date gain, according to Refinitiv data, the lowest level in at least a year.