HTX DeepThink: U.S. Stock Market Breadth Narrows, ETF Inflows Slow, Direction of Risk Assets Still Hinges on Interest Rates

BlockBeats news, September 29 — Chloe, author of the HTX DeepThink column and researcher at HTX Research, analyzed that the core issue over the next seven days is whether the market can absorb higher funding costs. The Federal Reserve raised rates by 25 basis points to 3.75%–4% on September 16, and this week's data will directly affect the magnitude and duration of subsequent rate hikes. The baseline judgment is that risk assets will remain volatile and weak, with continued internal divergence. A shift toward a sustained rebound would require the bond market to release pressure first.

The fragility of US stocks lies in the concentration of gains. As of September 25, the S&P 500 was less than 1% below its all-time high, while the equal-weight index had already fallen about 4% for the month, indicating that most stocks are already bearing the pressure of interest rates, with the index mainly supported by a handful of heavyweight tech names. If yields continue to rise, earnings expectations need to improve further to offset valuation compression; even if the index rebounds, if the equal-weight index does not recover in tandem, it will be difficult to confirm a full recovery in risk appetite.

Key tests include PCE on September 30, nonfarm payrolls on October 2, and the manufacturing and services PMIs released on October 1 and 5. The most favorable combination would be cooling core inflation, moderate job growth, and easing wage pressure, while a sharp drop in employment could trigger earnings concerns. Particularly worth watching is whether long-end yields can decline after softer data. If short-end yields fall while long-end yields remain elevated, it would indicate that improved policy expectations are not yet sufficient to resolve long-term financing pressure, and the rebound room for tech stocks will remain limited.

The crypto market already has spot funding support, but incremental inflows are slowing. According to Farside data, from September 21 to 25, US spot BTC ETFs recorded cumulative net inflows of about $2.386 billion, but daily inflows fell from $999 million to $135 million day by day. The changes over five trading days are not yet sufficient to confirm a trend reversal. If ETF inflows continue and the dollar and yields stabilize, BTC is expected to be more resilient than small-cap tokens; if inflows turn negative while contract open interest continues to expand, declines will be more easily amplified by liquidations. Over the next seven days, US stocks will be watched for breadth of gains, and the crypto market for spot absorption, while the overall direction still depends on the path of interest rates.

Note: The content of this article is not investment advice and does not constitute an offer, solicitation, or recommendation for any investment product.