Coming out of the long holiday weekend, major US indices ended the trading session around unchanged, but it was a volatile day. Futures were pointing to a lower open but improved after the ADP Weekly jobs number came in ahead of expectations and some positive commentary coming out of the US/Iran negotiations. After the open, the S&P 500 broke below its 100d ma (~6,812) and retested the late July/early February lows ~6,780 before bouncing about 1.5% off the lows. Before bouncing the peak to trough decline in the NYSE FANG+ index was nearly 20%. There was some modest outperformance in some of the mega-cap tech stocks but software (IGV -2.2%) stocks which have been ground zero for the AI disruption trade remained under pressure. Financials, which got hit for ~5% last week, did bounce back leading to the upside with the sector ending up ~1%. The energy and materials sectors both fell >1% as commodities came under some pressure with the USD bounce and comments coming out of the US/Iran negotiations. Staples, which had benefited from some defensive posturing recently, were hit following some disappointing commentary from an industry conference, as well as HHS Secretary Kennedy’s appearance Sunday on 60 Minutes, before he got his pump on with Kid Rock, in which he criticized ultra-processed foods,

Overnight futures were pointing to a higher open but faded back to unchanged heading into the opening bell. This week is options expiration with VIX futures expiring today which seems to be adding to some of the volatility. After opening around unchanged equities moved higher with the S&P 500 initially pausing right around yesterday’s high (~6,860) before accelerating to the upside and trading back up to ~6,900 just over the 50d ma. Mega-cap tech and financials both continue to move higher in today’s session. Meta (flat) and Nvidia (+2.5%) announced an expanded partnership, with Nvidia supplying millions of Blackwell and Rubin GPUs, along with CPUs and networking products for Meta’s data centers. This is helping mega-cap tech bounce and AI infrastructure stocks. Software is also moving higher despite mixed earnings (CDNS +9%/PANW -5%). Earnings from other companies have been caught up in the AI disruption trade are being well received including Moody’s (+6%), Verisk Analytics (+3%) and Jones Lang Lasalle (+5%) which is also helping overall sentiment.