US equities ended yesterday modestly higher but off their best levels, with the Russell 2000 outperforming the S&P 500. Semis, memory, and AI related networking components were once again among the best performers continuing their parabolic ascent. Energy, Materials, Industrials and Tech led while Comm Services, Staples and Discretionary lagged. On the Iran front, President Trump’s comments that the ceasefire was on “life support” and the counterproposal was “unacceptable” were the key soundbites which pushed both oil and Treasury yields higher.

S&P futures were lower overnight amidst reports that President Trump is more seriously considering a resumption of combat operations against Iran weighing on sentiment and continuing to keep a bid under oil. Futures were at their overnight lows ahead of this morning’s CPI print which came in slightly hotter than consensus. Given the overarching backdrop this was not unexpected and equity futures bounced modestly as yields, which were higher overnight, pulled back. However, equities have come under some additional pressure since the open which is mostly about the unsustainable upside move seen over the past few weeks. We are finally seeing some profit taking in the AI related trades with the NYSE 100 Semi indexes down >2% and >5%, respectively. There are sharp declines in other more speculative/thematic areas of the market including: quantum, space, nuclear, rare earths, and crypto. As we head to print, the S&P 500 is off of session lows down 44pts to 7,368 (-0.6%) while the Russell 2k is down 54pts to 2,817 (-1.9%). The Dow Jones Industrial Average is around unchanged given its more defensive makeup.