Yesterday US equities began the week by continuing the uninspired, summertime action we saw last week. Things turned more negative as the day went on. Oil rose and the long-end of the treasury curve sold off. The Iran situation seems no closer to resolution, if not deteriorating. The ceasefire ended yesterday with no extension agreed to, Iran said it was shifting posture from defensive to “fully offensive” and Trump threatened to bomb Oman if it gets in the way. The S&P ended down 0.5% but the equal-weight (-0.8%) lagged. The Russell 2000 outperformed modestly. Semis, memory, AI infrastructure and some thematic favs like quantum and robotics were among the best performers. However, hyperscalers and software lagged. Energy was the only sector with meaningful gains in the S&P 500.

Futures were under some additional pressure overnight. Yields continued to move higher, oil remained well bid but tech was reversing yesterday’s gains. There wasn’t a clear catalyst for the tech reversal, some have pointed to commentary from Xiaomi overnight suggesting memory prices will ease in the back half of the year. Fabrinet earnings also led to some weakness in the optical stocks, which have been wildly volatile over the last couple weeks, despite a beat and raise quarter. The tech/momentum weakness has accelerated throughout the session but rotational activity beneath the surface is blunting some of the weakness in the S&P 500, shades of July trading. The NYSE 100 is down >2% with semis/memory both off over 5% but software is higher.

The S&P 500 gapped down ~0.5% to ~7,700 the low end of the recent range and traded in a tight range since (~20pts), with options expiration this week potentially playing a roll in the current pin. The equal-weight version of the index is hovering around unchanged with energy, staples and healthcare all up ~1.5%. Small and midcap indices are down ~1%. Retail thematic favorites are also under significant pressure including quantum, rare earths and robotics ahead of the Unitree IPO in China tonight.