Good morning. Yesterday the S&P 500 began to slip just after trading began and continued fading for the rest of the morning. News of an update to Anthropic’s AI offering brought the shouting about software displacement to a full-scale scream. Software names sold off overseas, which then quickly moved to the US and across industry verticals. Tech was easily the worst sector, dropping 2% with software seeing the worst of it. The IGV software ETF was down almost 5%. Comm Services was another laggard. The S&P finished down 0.8% but was down as much as 1.6% at its lows, coinciding with a bounce after briefly trading below the 50d ma, after news of the passage of funding to end the partial government shutdown. Energy was the best sector as oil rose, while Materials and Staples also gained. Of note, the equal-weight’s losses were more modest (-0.3%) and the Russell gained 0.3% in the midst of the SAAS-pocolypse.

S&P futures are around unchanged, trading in a pretty tight range overnight. The IGV Tech-Software ETF is trading down another 1% in the pre-market. Not much reaction to a cooler ADP jobs number. AMD earnings last night are in focus today. Despite beating numbers and guiding above, the stock is down ~10% in the pre-market. Boston Scientific is also down a similar amount after earnings. Two stocks with high expectations. On the other hand, Eli Lilly is trading up 8% after a big print. It’s another big night for earnings which will include Alphabet, and Amazon reports tomorrow night.

Metals continue to rally after the violent correction Friday/Monday. Crude is around flat. Last night’s API inventory data showed a big 11M barrel draw, well above consensus, but that disparity wasn’t unexpected due to the recent winter storm. The DOE print is later today. Nat gas is modestly higher and the recent volatility has normalized since Monday. Bitcoin and Ethereum continue to move lower, though the move is modest so far today. Ag is also trading lower.