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Briefing.com Summary:
*There is a rebound trade unfolding in the AI space.
*The Q3 earnings-reporting period will pick up noticeably this week.
*Oil prices and Treasury yields are well-behaved to start the week.
There was no mistaking that last week was a tough week for the semiconductor and AI trade. Their struggles were the basis for a 4.5% decline in the Nasdaq Composite.
Staying true to form, though, there is a buy-the-dip bid in those stocks this morning that is driving the outperformance of the Nasdaq 100 futures, which are up 372 points and are trading 1.2% above fair value.
The S&P 500 futures are up 35 points and are trading 0.5% above fair value, yet the Dow Jones Industrial Average futures are down 127 points and are trading 0.3% below fair value, with the rotation trade flipping back in favor of higher-beta names for now.
The hope for many market participants is that this rotation will persist as we roll through the Q3 earnings reporting period, which picks up steam this week. SpaceX (SPCX), Meta Platforms (META), and Tesla (TSLA) will be key stocks to watch on the reporting front this week.
They will be pacesetters for the mega-cap universe, which holds so much sway over the market cap-weighted indices. Be that as it may, the reporting lineup this week is varied with names like General Motors (GM), 3M (MMM), AT&T (T), Netflix (NFLX), IBM (IBM), Northrop-Grumman (NOC), Abbott Labs (ABT), Halliburton (HAL), Capital One (COF), United Airlines (UAL), PG&E Corp (PCG), Las Vegas Sands (LVS), Honeywell (HON), and Western Digital (WDC) also on the docket.
The earnings news and the response to that news will take precedence as a driver of market sentiment, along with the typical variables of oil prices and interest rates.
Both are reasonably well-behaved this morning. WTI crude futures are down 0.7% to $100.70/bbl, attentive to President Trump's decision to waive certain sanctions on Russia in a bid to broker peace in its war with Ukraine, and the 10-yr note yield is unchanged at 5.10%.
The 10-yr note yield provided some sanctuary overnight, sliding to 5.06% as European markets reacted negatively to scenes of social unrest in France that drove the 10-yr French OAT up 10 basis points to 4.89%.
That is still mostly background noise, though, for a market that is plying a rebound trade in the tech sector. CoreWeave (CRWV), for instance, is up 6.5% in pre-market action after plummeting 25.2% last week.
SpaceX, down 10.2% last week, is another stock on the go, trading 1.3% higher. Elon Musk said he plans to give every child in America one share of his SpaceX holdings next year. 2027 isn't that far away, but that offering will have to wait for the rest of this year to play out, starting with today, which is looking better for the stocks that looked the worst last week.
