Friday weakness carried through overnight as futures opened lower and were down ~1% at their nadir. They recouped those losses throughout the morning following several headlines out of Middle East outlets that pushed oil lower. The S&P 500 opened slightly higher but then pulled back as more Iranian headlines took a pessimistic turn.

Currently the S&P 500 is just under 7400, down 0.3%. Semis and memory weakness from Friday has continued while software and the AI-disruption fears basket is higher . Traders are also looking ahead to the big Nvidia earnings results. The AI weakness is masking improved market breadth. The equal-weight is higher and outperforming by ~0.5%, and the same with profitable small caps (S&P 600) but the Russell 2000 is lagging, down a little under 1% as several higher-risk areas get hit: neoclouds/data centers, crypto, quantum among them.

Tech is lagging, and Utilities and Industries are also down ~0.5%. The Utilities weakness is mainly from NextEra’s following confirmation of the monster deal to acquire Dominion Energy in an all-stock transaction totaling >$65B. Industrials are seeing weakness from construction and electrical names as the AI trade stumbles again today. All other sectors are flat to higher, with Energy leading on the commodities gains (nat gas names trading well in particular). Financials are strong as well, with banks up modestly and the AI-disruption/software names with strong gains, along with payments and insurance. Oil was down earlier on the first wave of optimistic headlines but the later, pessimistic headers have pushed crude just over 1% but off the highs. US natural gas is also up 3%. Precious metals turned lower as oil rose, currently around flat.