Market Update

Good morning,
 
Yesterday most major US indices closed higher as some of the AI anxiety from earlier in the week faded. Mega-cap tech and software led to the upside ahead of a big evening of earnings. Financials which also got throttled on Monday bounced back while staples and commodity related sectors gave back some of the recent gains as the atoms vs. bits trade retraced. The S&P closed up 0.8% closing above its 50d for the first time since 2/11 putting the all-time high ~7k squarely in the cross hairs again.
 
Not surprisingly after the close Nvidia put up strong results which topped estimates, but the stock is only trading slightly higher. Quarterly revenues were ~$68B bringing the annual run rate >$200B however, the bigger market question still remains about the longevity of the spending cycle. Jensen Huang said, “the Chat GPT moment of agentic AI has arrived” and pushed back on the market narrative around the demise of software. On the software side, Salesforce had solid quarterly results while guidance was largely inline with estimates. Yesterday the stock rallied sharply ahead of the print, it traded down ~$10 in the aftermarket last night but like Workday yesterday has rallied almost all the way back to unchanged. Snowflake also had solid results and is trading modestly higher in the premarket. Futures traded a touch lower overnight but are near session highs, trading slightly in the green.
 

 
This morning’s initial claims ticked up modestly from last week to 212k from an upwardly revised 208k while continuing claims dropped to ~1.83ml from ~1.86ml. Treasury yields are down 1-2bps ahead of a 7yr auction later this afternoon. The USD index is hovering around unchanged trading just under its 50/200d moving averages. Fed Vice Chair for Supervision Bowman will testify before the Senate Banking Committee on bank supervision later this morning.
Government Yields

• US 2yr +1bps to 3.48%, 5yr -0bps to 3.65%, 10yr +1bps to 4.09%, 30yr +0bps to 4.73%
• USD index: -$0.18 to $97.55

 
Markets in Asia were mostly higher overnight. South Korea continued to surge to the upside up nearly 4% bringing YTD gains up to nearly 50% as memory stocks continue to move higher after Nvidia earnings. As expected, the Bank of Korea left rates unchanged at 2.5%. Japan ended modestly higher. The Hang Seng bucked the trend falling >1% with broad based weakness while the Shanghai Composite ended around unchanged. European indices are modestly higher with most major indices hitting new highs.
 

 
Commodities are mostly lower. Negotiations with Iran are ongoing while President Trump is reportedly speaking with President Zelinsky later today. ICE Brent fell ~2% overnight but is off the worst levels. Natural gas prices continue to bleed lower. The metals complex is pulling back with gold down ~1% and silver off ~4%. The correlation between software and crypto continued yesterday with the complex rallying sharply. Bitcoin traded back up to ~70k up >10% from this week’s low before pulling back. It is currently hovering around 68k the declining 20d ma is ~69.4k a level it has not traded above since 1/19.
 

 
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Earnings:

• After-Market: A, AGL, AHT, AI, ALKT, CAPL, CBZ, CHE, CHMI, CPK, CRGY, CRM, CSV, CWT, DBRG, EE, EFC, EPR, FIHL, FSK, GMRE, GNL, GPRK, GRBK, HBB, HCI, IBTA, IMAX, INN, IONQ, JOBY, KGS, KNTK, LB, LXU, MEG, MIAX, NGVT, NOG, NPKI, NSA, NTNX, NU, NVDA, ORA, OUT, PEB, PR, PRSU, PSTG, RCUS, RDW, SARO, SDRL, SM, SMA, SNOW, TDOC, TKO, TTD, TTI, UHS, UMH, USPH, VAC, VICI, VTOL, WHD, WSR, WTRG, XPER, XZO, ZIP, ZM, ZVIA
• Pre-Market (Thrs): Allianz, AMBP, AXA, BFLY, BIDU, BKSY, BLD, CARS, CCO, DCI, DCO, DQ, DSX, ECVT, EME, ENOV, FCN, FLOC, FOUR, GOLF, GTN, HGTY, HGV, HPP, HRL, HTZ, IBP, INSW, KBR, KOP, KRP, LNG, LOAR, LSEG, MCS, MRP, NCDL, NOMD, NREF, PEG, PENN, PRGO, PRKS, PRM, PRMB, PSBD, PZZA, Q, QBTS, SHAK, SJM, SRE, TDAY, TFX, TGLS, TWI, VIPS, VST, VYX, WD, WRBY, WWW
• After-Market (Thrs): AAOI, ACA, ADSK, AES, AGO, AHR, ALTG, ARLO, AXIA, BCO, BCSF, BHR, BWMX, CABO, CLPR, CODI, COMP.EQ, CON, CPNG, CRWV, CTRA, CUBE, DELL, DUOL, DV, EBS, ESTC, EVTC, FIGS, FLUT, GLOB, GRND, GSBD, INTU, MAIN, MBI, MP, MSDL, MTZ, NATL, NEXA, NHI, NNI, NRDY, NTAP, PAR, RKT, RLJ, SG, SITC, SMR, SOLV, TPC, VTEX, WULF, XPOF, XYZ, ZS  

Economic Data:
US:

• Initial Claims: 212k vs. 215k cons., prior revised to 208k from 206k
• Continuing Claims: 1.833ml vs. 1.86ml cons., prior revised to 1.864ml from 1.869ml
• 10:00 Fed Bowman
• 10:30 Nat Gas Inventories
• 11:00 KC Fed Index
• 1:00 7yr Auction

Global:

• South Korea leaves rates unchanged at 2.5%