STRAIGHT FROM THE TRADING FLOOR
by Michael P. Reinking, CFA - Sr. Market Strategist
Published on 6/23/26 (a/o 2:00 pm)
DOW 51,747 (+35), S&P 500 7,382 (-90), Russell 2000 2,983 (-22), NYSE FANG+ 16,818 (-341), ICE Brent Crude $77.04/barrel (-$0.86), Gold $4,140/oz (-$63), Bitcoin ~62.3k (-1949)
MAC Desk Commentary:
It was a mixed session coming out of the long holiday weekend. Reports of progress in nuclear talks between Iran and the US helped stocks early on, continuing to pressure crude (down ~3%) however, yields saw no benefit from that rising ~5bp across the curve. The S&P 500 fell 0.4% with notable weakness in the mega-cap tech stocks (NYSE FANG+ -2.6%). Hyperscalers were the main target with that value continuing  to accrete to semis and memory companies with the DRAM ETF climbing to new heights. Small and midcap indices ended with modest gains helped by strength in  REITs, healthcare and financials. Energy stocks also ended higher despite the decline in oil with refiners picking up the slack.

A night’s sleep didn’t help matters. Asian equites were under significant pressure overnight, especially the high-flying chip/memory names which bled into European markets and US futures.  The S&P 500 opened down ~1.5% nearly tagging its 50d ma (~7,340) but has since recouped some of those losses. Tech is once again bearing the brunt of the selling but the contours of that have changed with semis and particularly memory stocks getting hit hard (NYSE Semi -7%, DRAM ETF -12%). Much of the tech unwind seems to be positioning related. Outside of memory there wasn’t a particular headline that triggered the weakness but rather a culmination of narratives that have been evolving over the last couple of weeks, which we’ll touch on more below. Outside of the tech weakness the breadth is actually pretty solid with adv:dec in the S&P 500 ~1.5:1. Defensives, yield oriented sectors and YTD underperformers are leading to the upside. As we head to print, the S&P 500 is down 91pts to 7,382 (-1.2%), the Dow is up 30pts to 51,743 (+0.1%), while the Russell 2k is down 22pts to 2,983 (-0.7%).
Before we unpack tech, it is worth noting there a couple of catalysts to keep an eye on over the next couple of days. Newly public AI chip maker Cerebras reports tonight, Qualcomm has an investor day tomorrow and Micron reports earnings tomorrow after the close. Ahead of that last night there were reports that SK Hynix was shifting production away from AI chips to DRAM which seemed to be the trigger for weakness within that group. As we have noted recently, regulators in South Korea have been getting increasingly concerned about volatility and last night the Kospi fell 10%, triggering yet another market wide circuit breaker (4th this year).

The recent news/narrative around the AI complex has started to shift in a negative direction. At the center of that is the debate around the ultimate ROI of the capex spending which has been devouring the cash flow of the hyperscalers. As the business models of many of these companies have shifted away from asset light to very capital-intensive investment this has caused companies to begin to raise capital in both debt/equity markets (a shift away from a long period of stock buybacks). At the same time there are reports that corporates are starting to push back on the cost of tokens. This has also evolved into a debate around the use of cheaper open-source models as opposed to the frontier models. The leaders of those frontier models, which have very large capital commitments of their own, are yet to go public. The weakness in SpaceX over the last few days started to raise concerns on that front. There have also been a couple hyperscalers which have now started to sell compute capacity as opposed to using it for internal model development. The political landscape has also been shifting with the government limiting the rollout of new models and the NIMBY cries growing louder. So, there is a clear wall of worry to climb.

Moving to the economic data the weekly ADP employment bounced back to 30.75k from 26.5k last week. After the open S&P Global flash PMI’s showed business activity improving for the third consecutive month though that growth rate has decelerated from earlier this year. “The survey also showed an unbalanced economy, as sluggish demand for services contrasted with historically strong growth in demand for manufacturing goods, although the latter was again buoyed by precautionary stock building”. Employment within manufacturing fell but held up in services, potentially helped by the World Cup. There was some moderation in manufacturing input/output prices which remain elevated while services prices charged continued to tick modestly higher. 
Treasuries have a bid and yields are erasing some of yesterday’s increase with some steepening of the curve. Over the last couple of days the USD index has started to breakout of the year long range (~96 - $100.5) and is moving over $101 today. 

  • US 2yr -5bps to 4.19%, 5yr -3bps to 4.26%, 10yr -2bps to 4.49%, 30yr -2bps to 4.94%
  • USD index: +$0.40 to $101.19
It was ugly in Asia with South Korea at the epicenter of the weakness. The Nikkei dropped 3.5% as memory maker Kioxia fell 15%. The Yen was relatively stable following a testing of 162 the day before. Finance Minister Katayama confirmed a phone call with Treasury Secretary Bessent but didn’t say there was any intervention. Both Manufacturing and Service PMIs improved from last month. The Japanese government is targeting stocks, investment trusts and bonds to make up 40% of household assets by 2040, compared to 23% currently, according to a story in the Nikkei. Meanwhile, Sony is said to be planning its first dollar bond offering in almost 30 years- the latest major company to tap US capital markets. Chinese markets were lower as well. The Hang Seng Tech index has fallen below April 7, 2025 levels- the middle of the Liberation Day sell-off. Unlike prior tech weakness, AI-heavy stocks came under pressure as well last night. European equities are faring better than Asian counterparts but are still seeing losses of around 1%. PMIs across the region were mixed but Services improved while Manufacturing was more or less steady. 
Oil prices are down ~1% with ICE Brent hovering just above its 200d ma. Natural gas prices in the US are also down ~3%. With the USD strength metals are under pressure. Gold and silver tested last week’s lows. Wheat and corn are both lower while soy continues its recent outperformance. Bitcoin and ETH are under pressure as well reversing yesterday’s rally. 
Within the S&P 500 6 of 11 sectors are higher with defensive and yield oriented sectors outperforming. Staples, REITs and healthcare are all up >1% while Utilities are not far behind. Info tech is the clear leader to the downside but within that sector software stocks are bouncing. Industrials are down nearly 2% with the AI-infrastructure stocks selling off while airlines some transports and defense stocks outperforming. President Trump is expected to meet with major defense contractors tomorrow as Washington has been pressuring the industry to ramp up production (and stop buying back stock).  Materials are getting hit with the commodity weakness. 
Quickly looking ahead….This evening FedEx earnings will get some attention. There is some housing related data tomorrow ahead of PCE on Thursday. After the close Micron earnings and the Fed Bank Stress Tests will be released.

Earnings:
After-Market: CBRS, FDX, ICR, KBH, WOR
Pre-Market: NovaGold, PAYX 
After-Market: FUL, JEF, MLKN, MU, WS

Economic Data:
US:
  • ADP Weekly Employment change: 30.75K vs prior 26.5K
  • Manufacturing Flash PMIs: 55.7 vs. 54.8 cons., prior 55.1
  • Services Flash PMIs: 51.3 vs. 51 cons., prior 50.7
Global:
Flash PMIs:
  • Japan Manufacturing: 54.9 vs 54.5 cons, prior 54.5
  • Japan Services: 51.8 vs prior 50.0
  • India Manufacturing: 54.5 vs prior 55.0
  • India Services: 57.3 vs prior 59.8
  • France Manufacturing: 50.7 vs 50.0 cons, prior 49.7
  • France Services: 47.4 vs 45.5 cons, prior 44.3
  • Germany Manufacturing: 50.0 vs 50.5 cons, prior 50.1
  • Germany Services: 46.8 vs 49.0 cons, prior 48.1
  • UK Manufacturing: 53.1 vs 53.8 cons, prior 53.9 
  • UK Services: 48.7 vs 50.5 cons, prior 49.3
  • EU Manufacturing: 51.3 vs 51.6 cons, prior 51.6
  • EU Services: 48.9 vs 48.5 cons, prior 47.7

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