Fairlead Strategies founder Katie Stockton identified three key indicators that could exacerbate the current stock market decline. She monitors the breakdown of support levels across multiple individual stocks, the widening of credit spreads on corporate debt, and a decisive breakout in the Cboe Volatility Index above its 200-day moving average.
The Philadelphia Semiconductor Index dropped 11.4% last week, marking its sharpest decline since April 2025. Investment bank BTIG suggests this downward trend could persist until 2027. Meanwhile, the share of stocks trading above their 50-day moving average has decreased to 21%, a level consistent with the lows observed in March.
Credit market stress is currently under observation, particularly regarding companies like CoreWeave, which saw its stock price fall approximately 16% on October 14. Investors now demand a yield of about 14.8% for its 2032 notes. Stockton notes that while stress exists, it remains localized rather than systemic.
Broader economic indicators show rising costs, with the 10-year Treasury yield expected to stabilize near 5.25% before potentially climbing further. Freddie Mac reported that the 30-year mortgage rate reached 7.40% on October 15, rising from 6.95% on September 17. Large tech firms, including Alphabet, Amazon, Meta, and Oracle, have issued over $228 billion in bonds through October 13.
