Yesterday major US indices, ex-the Dow Jone Industrial Average, pulled back modestly after the very strong start in the month of August. It continued to be a very busy day of earnings which were broadly positive but tech stocks that reported were under pressure given the high expectations. Oil prices stabilized after a flare up in the Red Sea but that didn’t completely derail hopes for a deal to re-open the Strait. ISM services missed expectations with mixed underlying metrics; new orders increased, employment contracted and pricing pressures remained elevated. Treasury yields ended the day around unchanged levels. Probably the most notable price action happened in the metals complex which moved sharply higher amidst the recent USD weakness and easing rate hike expectations. Materials (commodity strength) and healthcare (LLY/AMGN/CRL earnings) were the only two sectors with meaningful gains. Energy and communication services were both down >2%. The latter got hit after another AI executive departure at Google while telecom stocks were under pressure after SpaceX executives said the company will go after their market share.

S&P futures traded in a tight range overnight on either of unchanged. However, there was clear weakness within tech. Memory and software stocks were under pressure after earnings related weakness with multiple stocks down well >10%. Equities have drifted modestly lower throughout the session as oil prices and yields moved higher as some details of the Iran/Oman proposal start to get leaked in the press. The proposal blocks the travel of US/Israeli ships and includes a fee, which has been a red line for the administration. Within the context of the recent rally the equity pullback is modest with major indices down less than 1%.