Yesterday the S&P 500 rose 0.6% while the equal-weight gained 0.4% and Russell 2000 0.3%. The AI complex was strong across sectors, with Tech and Industrials leading. SPCX and SMCI provided an early push with extremely bullish AI commentary and a pre-announcement, respectively. Comm Services was a laggard with GOOG lower and telecom hit on SPCX competitive concerns despite solid numbers from AT&T. Equities were at their highs and Treasury yields were around flat until news that the State Dept. was going to order personnel to leave US embassies across the Gulf. That came after reports suggested there was progress toward a resolution in That Other War (Russia-Ukraine). That was the setup before a slew of big earnings after the close including META, IBM and TSLA.

The tech strength yesterday has completely disappeared today, like an opponent’s big lead against the Knicks last year in the playoffs. Global markets came under heavy pressure overnight, especially the tech-heavy Asian markets. The S&P 500 opened below its 50d ma and has since moved lower, down >1% currently. Once again though the damage is basically concentrated inside Tech and the AI-infrastructure plays in Industrials. The equal-weight is up, with a defensive tilt as Consumer Staples and Utilities lead and Treasury yields move sharply lower. 9/11 of equal-weight sectors are higher. Small caps are down modestly but outperforming the large caps. Value is easily beating Growth.

Treasuries are seeing a strong bid today as investors flock to safety. Yields are down 10-20bp across the curve, and Dollar weakened against the Swiss Franc and yen havens, and strengthened against the Euro. Dec. Brent is up >3%, reaching a new high as Saudi Arabia saw more attacks and Russia/Ukraine continue to exchange fire. The US State Department has ordered non-emergency personnel to leave Saudi Arabia, adding to speculation that the US and Israel will unleash another round of airstrikes soon.