Good morning,

Yesterday, after opening slightly lower major US indices rallied throughout the session breaking a modest three-day pullback. Investors seemed to come to grips with the Warsh nomination and cyclical sectors moved higher after a much stronger than expected ISM Manufacturing survey. The S&P 500 closed up ~0.5% while the Dow Jones Industrial Average, small and midcap indices were all up ~1%. Industrials and consumer staples, led by big box retailers, outperformed. Energy was the worst performing sector down 2% as oil prices fell amidst easing Iran concerns. Utilities and REITs were down over 1% as Treasury yields ended the day higher. The metals complex which got throttled on Friday closed modestly lower but well off the lows with both gold and silver bouncing off their respective 50d ma’s. Crypto couldn’t get off the mat after the weekend selloff with Bitcoin hovering ~78k and Ethereum ~2.3k.

It was a strong overnight session in Asia while European indices have given up opening gains hovering around unchanged. US futures are looking modestly higher. Outside of earnings it is reasonably quiet from a headline perspective. Due to the partial government shutdown today’s economic data (JOLTS Job Openings) has been cancelled along with Friday’s BLS Employment Report. The House is expected to vote on a funding bill today but it’s not a slam dunk. Within tech the hardware versus software trade is set to continue. Teradyne is trading up >20% in the pre-market after very strong earnings partially helping to power the memory stocks overnight. The analog semi stocks are pulling back modestly after NXPI earnings weren’t quite as strong as Texas Instruments last week. Software stocks are under some pressure again in the pre-market on reports that Claude 5 is showing a leap in performance and pricing strategy and as Anthropic released a tool to automate legal work weighing on software providers in Europe (LSEG/RELX/WKL down ~10%). On the flip side Palantir is up >15% after posting strong numbers.