Welcome to the first trading day in February, which historically is a bit more difficult for stocks coming out of the January optimism. This morning, all eyes were on Punxsutawney, Pennsylvania, where the lovable rodent Punxsutawney Phil was pulled from his cozy den on Gobbler’s Knob, and unfortunately saw his shadow. Settle in for six more weeks of winter. And speaking of Groundhog Day, we're re-living a government shutdown.

Equities aren’t concerned by the shutdown or following the February blues historical trend. Major indexes are all higher with small caps resuming their leadership position after stumbling last week. The S&P is heading back up to 7000, just off ATH. Semis are strong today ahead of multiple names reporting this week.

Most sectors are higher, led by Consumer Staples and Discretionary. Travel and Leisure names are strong, especially cruise lines and retail is trading well too. Big box retailers are driving gains in Staples, overcoming some weakness in food and beverage names. Meanwhile, Energy is the lagging sector, trading lower with oil and nat gas. Gas-levered names are down more than oil names, with nat gas getting hit worse than crude today. Devon Energy and Cotera are merging to create a ~$50 billion oil and gas firm. The deal has been speculated for weeks.

Rates were around unchanged but moved 2-3bp higher on the strong ISM Manufacturing news that reinforces the expectation of the Fed on hold for a few more months. That also pushed the Dollar Index to its highs of the day as it continues to bounce from ~96 last week.

Energy commodities are selling off today with Iranian tensions easing. Brent is down 5% while natural gas tumbles 20% in the US. After Friday’s fireworks, today’s moves in metals are snoozers, but volatility remains. Gold was down ~10% overnight, tagging its 50d ma (~4,485) before bouncing all the way back to ~4,800. We’re currently ~$4700, down slightly. Silver has traded in a similar pattern trading down to ~$71 before bouncing back over $80 and trading flat.