Good morning and Happy (Now semi-)annual Russell Reconstitution Day. The S&P 500 ended yesterday around unchanged while the equal-weight and Russell 2000 rose 0.7% each. Tech weakness was the driver for the divergence. While Micron’s blowout earnings took its shares 16% higher (and those of other memory/storage names up as well) the rest of the tech sector was under pressure. This included the hyperscalers and smaller neoclouds as concern around exploding costs compounded. Broader pricing concerns then manifested after Apple (-6%) announced big prices increases across most of its lineup and Microsoft (-4%) said it was raising Xbox prices. Meanwhile Industrials, Healthcare and Materials led to the upside. Outside of equities, crude rose on news of a cargo ship attacked in the Strait. Yields ended flat-ish after the PCE print was more or less inline, GDP revised higher and Personal Income/Spending above estimates.

S&P futures are trading lower this morning ahead of the big Russell index reconstitution at the close today. Futures are fading back toward their overnight lows as we approach the Open. The pre-market decliners list is littered with Tech. The NYT reported last night that OpenAI is leaning towards delaying its IPO to 2027. Memory and storage names are giving back some of yesterday’s outsized gains.

The treasury curve is steepening this morning as the 2y falls 3bp while 10/30y are flat/up 2bp. The US Dollar Index is pulling back a bit after reaching 101.50 the past 2 days. Oil prices are reversing yesterday’s bounce down >3% as Saudi Arabia began crude loadings at its Ras Tanura terminal for the first time in over three months. In addition, the IAEA said nuclear inspectors will be given access to Iran as part of the interim deal. Gold retested 4k overnight and is up 0.4% at ~4,060. Silver retested its recent lows (55.75) before trading back up to ~58. Copper held its 100d ma and is now up ~0.5%. Ag is moving lower. Bitcoin tried to bounce overnight trading back up to nearly 61k but has turned lower again holding ~59k, yesterday’s low was 57.5k.