Morning Notes — Into Year-End

The S&P 500 (SPX) should be upwardly biased into year-end as hedge fund managers avoid negative P&L on shorts.  Self-preservation mode also helps the market cap weighted SPX as investors show a preference for lower beta, large cap stocks.  We saw this yesterday in a rotation from expensive SaaS into mega cap Tech.  A busy capital markets calendar is another year-end dynamic that works in favor of SPX outperformance vs. the small cap Russell 2000 index (RTY) for example.  The number and pace of IPOs, large blocks and follow-on offerings over the past 2 weeks has been relentless and now beginning to weigh on the broader market as investors show signs of fatigue.