Investing With IBD Ep. 345 Bullish Or Bearish? How These Factors Will Influence Where Markets End The Year.
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Nov 5, 2025 Joe Mazzola, Head Trading and Derivatives Strategist at Charles Schwab, dives into the complexities of current market trends. He discusses the impact of rising 10-year yields on equity volatility and how small caps are being affected. Mazzola explains the risks of narrow market leadership despite strong indices, and the evolving influence of AI on sector correlations. He also highlights the persistent dip-buying behavior and contrasts investor sentiment with actions. Mazzola wraps up by explaining options strategies for hedging against earnings risks.
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Bond Stability Drives Equity Breadth
- Bond market stability is necessary for the equity rally to reach a broader second leg.
- Rising 10-year yields make small- and mid-cap participation unlikely without steady bond levels.
Mega-Caps Mask Market Dispersion
- Dispersion is widening: a few mega-cap leaders mask most stocks' underperformance.
- Only about 15% of S&P 500 stocks have outperformed the index year-to-date, concentrating returns.
AI Spend Shifts To Debt Markets
- AI spending is moving from free cash to debt financing among big tech.
- Companies like Meta and Alphabet are beginning to tap debt markets to fund large AI capex.