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Briefing.com Summary:
*WTI crude futures are closer to $90.00/bbl now than $80.00/bbl, as the U.S.-Iran standoff persists.
*Treasury yields are rising, along with inflation worries.
*The market has a defensive tone as it readies for some key earnings reports after the close.
It was a big day yesterday for the semiconductor stocks and high-beta factor, both of which had a technical charge in them following some sharp drawdowns of late. The Philadelphia Semiconductor Index surged 5.2%, while the Invesco S&P 500 High Beta ETF (SPHB) jumped 3.1%. They did so, turning a blind eye, it seemed, to rising Treasury yields and oil prices.
At the moment, that is looking a little harder to do, with WTI crude futures now closer to $90.00/bbl than $80.00/bbl, and the 10-yr note yield sitting at 4.65%, up 10 basis points for the week, paying some inflation heed as well to new tariff actions and the administration's suggestion that there are more to come.
The bump in oil prices and Treasury yields have contributed to a defensive-minded turn in the equity futures market.
The S&P 500 futures are down 27 points and are trading 0.6% below fair value, the Nasdaq 100 futures are down 278 points and are trading 1.2% below fair value, and the Dow Jones Industrial Average futures are down 77 points and are trading 0.2% below fair value.
Festering concerns that the U.S.-Iran standoff is at risk of heating up further, as opposed to cooling off appreciably soon, are behind the spike in oil prices. A contention from Secretary of State Rubio that Iran is not serious about talks has upset the energy market, which in turn is creating some inflation upset that is lifting Treasury yields.
For now, anyway, that appears to have created some stasis for the momentum trade, which is also being limited by AI regulatory concerns; threats by the Houthis to disrupt shipping in the Red Sea; the specter of a carry-trade unwinding with the yen hitting its weakest level against the dollar since 1986, raising the possibility of intervention at the same time the Bank of Japan is signaling open-mindedness to faster rate hikes; and buyer hesitation in front of earnings reports after the close from Alphabet (GOOG/GOOGL), Tesla (TSLA), ServiceNow (NOW), IBM (IBM), and Texas Instruments (TXN).
Earnings reports before the open, led by AT&T (T), have been mostly better than expected. GE Vernova (GEV) has been a notable exception, coming up well shy of its consensus EPS estimate. Shares of GEV are down 3.6% in pre-market trading.
Many stocks, however, are down in pre-market action, with yesterday's leaders turning into this morning's laggards.
