This is CNBC senior market commentator Mike Santoli’s daily notebook with thoughts on trends, stocks and market statistics. In early U.S. trade, bleak global growth and hints of Covid caution saw the S&P 500 lose about 1% of its three-week rally of 7%, but otherwise didn’t offer much about the recent Concrete evidence of the fate of a rebound attempt. China’s latest Macau blockade and tougher restrictions come with a subplot of a global wave of stealth that dampens risk appetite, at least for now. Bond yields slump, the dollar tumbles, and the question of whether the Fed can and will ease before the threat of recession gets bigger is superimposed. Yawn if you’ve heard this before, but the S&P 500 hasn’t done anything to reverse a six-month decline. However, it remains above both the early month low and the May intraday low, so the main conclusions are inconclusive at this point. Over the past week or so, we’ve seen a pattern of early weakness in the stock market and firm afternoon. Today may be a small test of whether this is a trend, and what’s behind it other than the new quarter’s capital replenishment depleted stock allocation. Markets have already priced in serious risks to expansion, as the performance of Goldman Sachs’ Cyclical vs Defensive stock basket shows. Note that the defense group has a lot of technical exposure, and the profitable flavor of the technology is also described as “quality”. Although today, the big tech slugs are hurting AAPL and others to give back some recent gains. As previously mentioned, the dollar’s surge against all other currencies has become quite extreme in magnitude and speed. This is a pressure point for corporate earnings and U.S. economic growth, but it also helps the Fed achieve its desired goals of containing price inflation and improving financial conditions. U.S. dollar index over the past decade. Sure, it’s being overbought, but it’s also a sign of a strong underlying trend. There is sometimes a simple notion that dollar headwinds make smaller stocks a better choice because fewer trade-dependent multinationals are found in the small-cap index. However, that often fails to overcome fears of a slowing economy and weakening liquidity. Still, for those willing to bet that the law of mean reversion still holds true, the discounts for small-cap stocks versus large-cap stocks have gotten pretty extreme. Market breadth on the NYSE was rather weak today, and the Nasdaq was a little better. The VIX edged up, still in the 26-27 range. It is on alert, but given the dramatic nature of the decline in recent months, there is no real rush to seek downside protection.