Yesterday the AI trade came under pressure after Anthropic’s CEO called for slowing down the pace of AI development in order to ensure innovation proceeds safely. Meanwhile oil continued to march higher as did yields, with the 10y hitting 5.0% for a moment. Equity losses were relatively mild given the sharp tech moves. The S&P 500 fell 0.5%, equal-weight was up marginally, and the Russell 2000 fell 0.4%.

The S&P opened slightly lower today and weakened throughout the morning, eventually falling below 7600: the 50d ma and the lower boundary of the past month’s trading range we’ve been noting. The index is currently looking for support at the July highs ~7580. The equal-weight is about inline while small caps lag. Energy resumed leadership today as oil strengthened around the Opening Bell. It's also the only sector substantially in the green.

Ahead of tomorrow’s Fed decision, Treasury yields pulled back from their highs and were around flat, with the 10y just below 5.0%. After very strong auctions last week, today’s 20y auction was soft tailing by 2bp, which sent yields higher though they are coming off the immediate pop. The US Dollar index gapped up as the yen continued its weakness from yesterday, helped along by reports of potential increases in defense spending. Oil headed higher on news of protests disrupting Libyan oil field production, and Saudi Arabia telling European refiners their September cargos are cancelled due to the East-West pipeline closure. Metals are lower with the dollar strength and Bitcoin again stalled near $80K and is weak today ahead of a procedural vote for the Clarity Act.