Wall Street Daily (March 26): US stocks rebounded across the board on Wednesday, with market sentiment showing signs of recovery but not fully warming up; small-cap stocks led the way, while Chinese stocks and crypto assets strengthened.

Summary: US stocks generally rebounded on Wednesday, with the S&P 500 Index rising by 0.54%, Nasdaq climbing 0.77%, Dow Jones Industrial Average gaining 0.66%, and Russell 2000 advancing 1.23%; VIX fell to 25.33, down -6.01% in a single day, indicating that market sentiment improved compared to the previous day but remains far from full recovery. The main trading theme continued to revolve around expectations of easing tensions in the Middle East. After oil prices stabilized following high volatility, risk assets found relief, with small-cap and Chinese stocks rebounding significantly stronger than large-cap stocks. Meanwhile, NVIDIA's continued strength also provided support for Nasdaq sentiment. In terms of major asset classes, the US Dollar Index rose 0.42%, gold increased by 0.65%, signaling that safe-haven demand has not entirely faded, crude oil surged 3.28%, Bitcoin climbed 1.50%, and risk appetite recovery began spreading to high-volatility assets.

I. Major Events

Expectations of easing tensions in the Middle East continued to develop, prompting the market to first engage in risk compensation. The key driver behind Wednesday’s market movement remained the easing signs in the US-Iran conflict. News indicated that Iran is reviewing a ceasefire proposal put forward by the US. Although no direct negotiations have been agreed upon, marginal changes were sufficient for the market to trade on the assumption that 'the worst-case scenario will not escalate immediately.' Under this expectation, crude oil slightly loosened from its extremely tight pricing, and stock market risk appetite recovered accordingly, with all three major indices closing higher, led by deeply corrected small-cap stocks. However, this rebound still carries a noticeable message-driven hue: gold continued to rise, and the dollar remained strong, indicating that funds are more focused on short-term compensation rather than completely abandoning defensive positions.

II. Major Trends

The market structure continues to evolve in the direction where breadth outperforms concentration, and value outperforms growth. First, looking at the indices over a three-month horizon, IWM fell only 0.17%, significantly better than SPY’s 4.60% drop, indicating the ongoing relative strength of small-cap stocks. On a daily basis, IWM gained 1.22%, continuing to outperform SPY’s 0.56%. Next, considering market breadth, RSP fell just 0.49% over three months, significantly stronger than SPY, suggesting that the market isn’t solely propped up by a few heavyweight stocks; the scope of recovery is expanding. From a style perspective, SPYV declined 1.36% over three months, clearly better than SPYG’s 7.86%; in the past two weeks, SPYG dropped 4.01%, deeper than SPYV’s 1.65% decline. While the tech trend hasn't disappeared, capital clearly prefers to allocate incremental elasticity towards lower valuation and lighter positioning areas.

III. Market Sentiment

Market sentiment improved compared to the previous day but remains far from full recovery. VIX falling to 25.33 indicates reduced hedging demand against sudden risks, though this level is still relatively high, maintaining a clear undertone of caution. The CNN Fear & Greed Index stayed at 19, neither worsening further nor exiting the extreme fear zone, suggesting investors are making tentative additions rather than fully turning optimistic. Structurally, RSP continues to outperform SPY, representing solid internal market support. Option data shows protective positions easing somewhat, but no definitive signal of a complete sentiment reversal has emerged. In other words, the current phase looks more like risk compensation rather than a new round of indiscriminate chasing.

IV. Market Scan

1. Index ETFs

Index ETFs continue to show a distinct structure of strength versus weakness. IWM gained 1.22%, continuing to lead the rally, reflecting a shift in capital preference from mega-cap stocks to smaller and more flexible directions; SPY rose 0.56%, also finishing in positive territory but lagging behind IWM, indicating that this rebound’s core isn’t driven by unilateral moves in large-cap heavyweights, but rather broader risk compensation.

2. Sector Performance

At the sector level, materials rose 1.98%, making it one of the strongest performers of the day, reflecting renewed interest in cyclical trades. Energy fell 0.44%, becoming a relative laggard, indicating that crowded oil and gas trades started to diverge under expectations of easing geopolitical risks. This means that capital isn’t simply chasing all high-beta assets but is marginally shifting from safe havens and resources toward sectors more aligned with economic recovery.

3. Seven tech giants

Among the seven major tech companies, NVIDIA rose by 1.99%, continuing to act as a sentiment anchor. Expectations for the next-generation AI chips and its record high stock price have reinforced the market's view that the AI sector remains resilient. In contrast, Microsoft fell by 0.46%, indicating that even though the core technology narrative hasn't changed, capital is making finer distinctions internally: willing to continue chasing the strongest leaders but not aggressively adding positions in other giants.

4. Chinese Equities

Chinese tech stocks were one of the most elastic sectors of the day. JD.com surged 8.30%, becoming the top-performing stock, illustrating that earnings reports and fundamental catalysts can still quickly attract capital inflows. PDD Holdings rose by 4.61%, Alibaba increased by 3.50%, Baidu climbed by 2.73%, and KWEB advanced by 3.04%, collectively reflecting the systematic recovery of the Chinese tech sector. Comparatively weaker was Tencent Music, which dropped by 1.32%, showing that while the sector is strong, there are still internal divergences.

5. Cryptocurrencies

The cryptocurrency space also began to follow the rebound in risk appetite. Bitcoin's latest quote showed a 1.50% increase for the day, indicating that investors are willing to once again tolerate higher volatility assets. Among related concept stocks, RIOT surged by 5.79%, with elasticity significantly higher than Bitcoin itself, suggesting that mining stocks are more favored by short-term trading capital. Meanwhile, COIN only edged up by 0.03%, showing relatively restrained performance, reflecting that the crypto sector isn’t seeing uniform gains but continues to rotate around high-elasticity targets.

$S&P 500 Index (.SPX.US)$ $SPDR S&P 500 ETF (SPY.US)$ $NASDAQ 100 Index (.NDX.US)$ $Invesco QQQ Trust (QQQ.US)$ $Dow Jones Industrial Average (.DJI.US)$ $State Street® SPDR® Dow Jones Industrial Average® ETF Trust (DIA.US)$ $Russell 2000 Index (.RUT.US)$ $iShares Russell 2000 ETF (IWM.US)$ $Roundhill Magnificent Seven ETF (MAGS.US)$ $USD (USDindex.FX)$ $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ $iShares 20+ Year Treasury Bond ETF (TLT.US)$ $XAU/USD (XAUUSD.CFD)$ $SPDR Gold ETF (GLD.US)$ $CBOE Volatility S&P 500 Index (.VIX.US)$ $Bitcoin (BTC.CC)$ $BTC/USD (BTCUSD.CC)$ $Ethereum (ETH.CC)$ $ETH/USD (ETHUSD.CC)$ $iShares Ethereum Trust ETF (ETHA.US)$ $NVIDIA (NVDA.US)$ $Tesla (TSLA.US)$ $Meta Platforms (META.US)$ $Amazon (AMZN.US)$ $Alphabet-C (GOOG.US)$ $Microsoft (MSFT.US)$ $Apple (AAPL.US)$

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