The S&P 500 fell 0.2% yesterday while the equal-weight (-1.2%), Russell 2000 (-0.9%) and Dow (-1.1%) saw larger declines. Oil jumped over 5% after the US resumed strikes against Iran and President Trump commenting the ceasefire was over as far as he was concerned. Those initial comments were followed up with ones a bit less bellicose during the NATO summit. Tech strength mitigated the losses for the S&P versus the other indexes.

The US conducted more airstrikes on Iran overnight and Iran hit sites in Kuwait and Bahrain. Despite the return to hostilities, it looks to be another contained flare-up rather than complete collapse of the détente. The S&P opened slightly higher and rose throughout the morning, currently sitting around best levels, up just under 1%. The green is dispersed broadly as the equal weight S&P is about inline and small caps are outperforming. Data centers/neoclouds, quantum computing and genomics themes are trading well among thematic plays while the space group is mixed. Treasury yields are at their lows today, down 3-7bp with the curve steepening as crude pulls back after 2 days of gains. Brent crude was modestly higher after strong gains the past two days but began to fade as we approached the Open and then turned negative.

Software stocks were under pressure earlier following a Bloomberg report that Starbucks is using AI to develop internal tools to cut reliance on outside software, playing right into the AI disruption narrative. A CRM downgrade didn’t help either. However, dip buyers answered the call. The IGV software ETF, down over 2% at the lows, is currently up 1%.

6/11 sectors are higher. Besides Tech, Financials are also leading. Most groups are higher, though Insurance is mixed and services/data businesses are under pressure. The early software weakness is partially to blame, but it extended to exchanges on news that Kalshi is in talks with US regulators to expand perp futures into markets beyond crypto. The defensive Staples sector is the laggard today with Pepsi weaker after its earnings results