It's Summertime! Iran headlines continued to dominate the press over the weekend. While initially tilted negatively, optimism eventually took hold after a meeting in Switzerland where both Iran and the US focused on “encouraging progress”. The S&P 500 opened around flat, briefly moved above 7500 before heading to session lows, down around 0.5%. The index recovered a bit but started to fall back towards the lows as we hit print. The equal-weight is outperforming, up slightly, as are small caps. Much of the market-cap weighted index underperformance is due to a group of mega caps under pressure. Alphabet, Oracle and Amazon are down ~5%. Alphabet saw another big name leave its AI ranks for a competitor and Microsoft’s CEO Satya Nadella talked up the benefits of lower-cost AI models versus the frontier models. The general action has hyperscalers under pressure.

Alphabet’s weakness puts Comm Services at the bottom of the sectors today. Amazon is pulling down Consumer Discretionary in a similar fashion, though Travel and Leisure names are broadly lower as well despite oil’s continued decline. Tech is seeing weakness in software while memory/semi names are higher. Real Estate is leading today despite yields rising. Data center developer Digital Realty is up ~5% after announcing several infrastructure deals and acquisitions. Healthcare is also a leader today. The market is applauding AbbVie’s ~$11B acquisition of Apogee Therapeutics, sending shares up over 6% as the stellar biotech M&A environment continues.

Treasury yields are up ~5bp across the curve. Crude is down around 3%. Metals are weaker as treasury yields rise. Ag is lower. Bitcoin and Ethereum are up ~2% but a little off their highs. Bitcoin made a run back to $65K before pulling back. Tomorrow’s data will include global Flash PMIs and several major earnings reports including Carnival and FedEx.