S&P 500: Credit Markets Raise Questions Equity Investors Choose to Ignore

The S&P 500 rose 38 basis points on Tuesday, driven primarily by declining implied volatility rather than fundamental strength. While CPI data came in cooler than expected and Treasury yields fell, Fed Chair Kevin Warsh's hawkish comments raised questions about future rate hikes. A notable market disconnect emerged with Nvidia, which rallied 4% despite its credit default swap spread widening significantly from 42 to 60.6 basis points—a divergence that typically signals underlying credit concerns that may eventually impact equity prices.