Introduction#
Yesterday’s U.S. session closed with mixed index prints and a fresh all-time high for the Nasdaq-100, even as eight of eleven GICS sectors finished in the red. According to Monexa AI’s closing tape, the S&P 500 (^SPX) ended virtually unchanged at 6,092.16, while heavy buying of mega-cap semis lifted the Nasdaq Composite (^IXIC) +0.31 % to 19,973.55. The Dow Jones Industrial Average (^DJI) slipped ‑0.25 % as rate-sensitive industrials and dividend names came under pressure.
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Overnight, Asia took its cue from the U.S. tech melt-up—Tokyo’s TOPIX added +0.6 % and Taiwan’s Taiex printed a record—yet European bourses are fractionally lower ahead of the U.S. bell as traders parse another slide in the dollar, a softer open for Treasury futures and headlines that President Trump could announce his preferred successor to Fed Chair Jerome Powell before year-end (Reuters.
In short, the market is wrestling with two competing forces: a ferocious bid for anything tied to the artificial-intelligence capex cycle, and a drip of macro angst reflected in rising real yields, weak defensives and a brutal markdown in real-estate equities.
Market Overview#
Yesterday’s Close Recap#
| Ticker | Closing Price | Price Change | % Change |
|---|---|---|---|
| ^SPX | 6,092.16 | ‑0.02 | ‑0.00 % |
| ^DJI | 42,982.43 | ‑106.59 | ‑0.25 % |
| ^IXIC | 19,973.55 | +61.02 | +0.31 % |
| ^NYA | 20,103.72 | ‑113.62 | ‑0.56 % |
| ^RVX | 22.34 | ‑0.24 | ‑1.06 % |
| ^VIX | 16.75 | ‑0.73 | ‑4.18 % |
The headline takeaway was the persistent compression in volatility—VIX back under 17, a six-week low—even as equity breadth deteriorated (only 41 % of S&P constituents finished green). Chip heavyweights NVDA +4.33 % and SMCI +8.80 % added roughly eight index points to the S&P on their own, offsetting steep losses in staples, utilities and REITs.
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Overnight Developments#
Asia–Pacific: Semiconductor optimism spilled into Korea (KOSPI +0.7 %) and Japan, helped by a Nikkei report that TSMC will accelerate N2 volume production. China’s CSI 300 was flat—Shanghai property names again underperformed on weak mortgage data.
Europe: The Stoxx 600 opened ‑0.2 % as UK June retail sales crashed to a CBI index of ‑45, the worst since 2021. Eurozone bond yields are up 3–4 bp, mirroring the move in U.S. 10-year notes to 4.38 % overnight.
FX & Commodities: The dollar index DXY slid another ‑0.4 % to 101.90 after Bloomberg’s “Morning Bid” framed Trump’s Fed comments as “pummelling Powell.” WTI crude is holding $79 amid chatter of a Chinese SPR top-up. Gold ticks $2,417/oz, supported by the softer greenback and comments from Delancey Wealth’s Ivory Johnson that “liquidity and fiscal stimulus will push the metal higher.”
Macro Analysis#
Economic Indicators to Watch#
Today’s marquee release is the final read of Q1 GDP (08:30 ET); consensus looks for an upward revision to +1.5 % SAAR from the prior +1.4 %. Equally important will be the core PCE prices component, expected to hold at +3.4 % y/y. A hotter print could nudge swap pricing toward just one Fed cut in 2025—CME FedWatch currently assigns a 54 % probability of a September move.
Initial jobless claims drop at the same time (street: 240 k). With continuing claims edging up for six of the last seven weeks, a surprise jump here would reinforce the view that labour slack is quietly building beneath the surface of the AI euphoria.
Finally, the Kansas City Fed’s June manufacturing index (11:00 ET) offers a clean read on Mid-America supply chains just as freight bellwether FDX warns on trade uncertainty.
Global/Geopolitical Factors#
• Fed Succession Risk: Barron’s argues an early nomination could “fuel inflation and tank the dollar” if markets sniff a dovish tilt. That narrative, more than rate-cut timing, is driving the fresh leg lower in DXY.
• NATO Defence Spend: Overnight pledges lifted European defence stocks; watch U.S. primes like GD +1.73 % for sympathy.
• Middle East Quiet: A tentative Israel-Iran truce has calmed the energy complex for now, removing one short-term upside tail risk to oil prices.
Sector Analysis#
| Sector | % Change (Close) |
|---|---|
| Technology | +0.35 % |
| Basic Materials | ‑0.34 % |
| Communication Services | ‑0.37 % |
| Healthcare | ‑0.42 % |
| Financial Services | ‑0.61 % |
| Consumer Cyclical | ‑0.86 % |
| Energy | ‑0.98 % |
| Consumer Defensive | ‑1.57 % |
| Industrials | ‑1.68 % |
| Utilities | ‑2.01 % |
| Real Estate | ‑6.30 % |
A glance at the board shows an unusual reversal of the classic risk-off playbook: Utilities, Staples and REITs—normally shelters—took the biggest beating, while the frothiest corner of Tech kept climbing. The message is clear: bond-proxy equities are responding to sticky real yields, not recession fears, whereas AI hardware enjoys genuine earnings momentum.
Technology: High-bandwidth memory shortages are easing at Samsung and SK Hynix, but pricing remains firm, underpinning margins for Nvidia’s next-gen Blackwell GPUs. Wedbush just raised its NVDA bull-case to $185, citing “insatiable” cloud demand.
Real Estate: The VNQ ETF plunged ‑3.8 % as data-centre darling EQIX collapsed ‑9.07 % on talk of delayed hyperscale tenancy contracts. Rising cap rates—now 6.1 % for Class-A offices vs. sub-5 % a year ago—add to the pressure.
Utilities: Goldman’s upgrade of DUK to Buy cushioned the blow, yet the sector’s ‑2.0 % drop shows that cap-ex heavy balance sheets are vulnerable when the 10-year inches toward 4.50 %.
Company-Specific Insights#
Earnings and Key Movers#
The tape offered a textbook study in dispersion:
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SMCI +8.80 % ripped to its highest since mid-May. Wedbush cites nineteen new AI server wins and sees fiscal-26 revenue topping $30 bn. Options flow was lopsided: 1.45 m calls vs. 0.95 m puts open interest.
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NVDA +4.33 % reclaimed the title of world’s most valuable company at $3.77 tn. Asian chip ETFs mirrored the move, underscoring its global sentiment footprint.
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MSFT +0.44 % shrugged off layoff chatter; Wells Fargo pegs Azure-driven AI revenue at $100 bn by decade-end, though H.C. Wainwright started the name at Neutral citing rich multiples.
-
COIN +3.06 % hit a 52-week high after Bernstein lifted its target to $510, calling it “the most misunderstood name in crypto.” ETF watchers note inflows into amplified blockchain products like BKCH.
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FDX ‑3.27 % sliced through its 200-day MA as guidance implied a Q1 earnings trough well below consensus. The read-through for global PMIs is grim, reinforcing soft-landing scepticism.
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PAYX ‑9.40 % suffered its worst day since 2020; organic growth of just +3 % ex-Paycor raised alarms about small-biz hiring momentum. Rival ADP followed ‑4.24 %.
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KYMR ‑1.42 % held up after Jefferies flagged +38 % upside on its molecular-glue oncology tie-up with Gilead. Biotech remains the lone Healthcare pocket showing risk appetite.
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WGO ‑9.86 % missed on EPS and slashed FY-25 guidance, an ominous signal for discretionary durable spending.
Conclusion#
Morning Recap and Outlook#
Heading into the Thursday session, three variables will shape the open:
- GDP/PCE print at 08:30 ET. A hotter-than-hoped core deflator could deepen the rout in yield-sensitive sectors and test the resilience of the tech bid.
- Trump’s Fed-chair drumbeat. Any definitive shortlist could jolt the dollar and, by extension, the commodity trade. Keep an eye on gold’s $2,430 technical ceiling.
- Positioning extremes in AI names. With NVDA’s stochastics back at 87 and SMCI’s call/put skew hitting 1.53, even a benign macro tape could spark profit-taking.
Actionable takeaways before the bell:
- Fade the extremes: Real-estate carnage has pushed quality data-centre REITs toward a 20 % NAV discount; selectively adding exposure could hedge an AI unwind.
- Watch small-cap vol: The Russell-2000 VIX (^RVX) at 22.3—its lowest since February—offers cheap optionality if GDP disappoints.
- Mind the dollar: DXY’s slide is self-reinforcing for commodities; incremental weakness supports Energy names that looked washed-out after a ‑0.98 % sector day.
Bottom line: Tech remains the locomotive, but the railbed is narrowing. With real yields grinding higher and defensive sectors failing to catch bids, rotation risk is rising. Traders may enjoy one more squeeze higher, yet disciplined investors should keep some dry powder—and perhaps a fresh set of small-cap puts—in case the macro clouds finally darken the AI sun. Stay nimble.