This morning the S&P 500 opened slightly higher but wandered lower throughout the session, following Tech’s lead. AMD earnings last night played a big part. Despite beating numbers and guiding above, the stock was down ~10% in the pre-market and that weakness continued. After yesterday’s software puke, the market apparently still hasn’t gotten everything out of its system as the IGV ETF is trading down another 3%, though its less bad than yesterday. The real unfortunate part is that semis are under broad pressure after AMD’s (-15%) print. The ICE Semi index is down ~5%. It’s another big night for earnings which will include Alphabet, and Amazon reports tomorrow night.

Once again though, a look under the surface reveals a different environment. The S&P is down 0.7% trying to hold onto its 50d ma ~6876 (it bounced off it yesterday). However, the equal weight is basically the mirror image, up 0.6%. Mid caps are slightly lower while there’s some interesting divergence in small caps as the S&P 600 (profitable-only) is flat-to-higher while the Russell 2000 is down almost 2%.

Besides Tech, Comm Services is lagging as the megacaps slide 2-3%. Similar issue in Discretionary with Tesla down 7% and Amazon down 3% ahead of earnings tomorrow night. Markets took another leg down after Axios reported that nuclear talks with Iran are collapsing. That helped put a bid in crude and sent Energy to the top of the sector performance list. Other top performers include defensively-oriented Staples, Healthcare (Lilly’s 10% rip helping shrug off Boston Scientific’s slide) and Real Estate, despite yields slightly higher.

There were multiple geopolitical and trade updates today. President Trump and China’s President Xi held a phone call this morning. According to Trump, they spoke about China potentially buying more agriculture and energy from the US in a warmup to the scheduled meeting between the two in April. The US announced plans with Japan, Mexico and the EU to develop policies and partnerships to address critical minerals vulnerabilities.

ADP employment data this morning took the place of yesterday’s JOLTS data delay (government shutdown). 22k jobs added were below consensus and the prior month. Education and Health Services added 74k jobs, while Professional and Business Services shed 57k and manufacturing shed 8k. Mid-sized firms added jobs 41k jobs while large employers shed 18k and small employers were flat. Treasuries didn’t react too much to the report, but right after, the detailed Treasury refunding schedule came out. While it was as- expected, the long-end rose about 2bp as markets contemplate the potential for more duration to eventually hit the market. The US Dollar Index is relatively has moved higher after taking a pause from recent gains yesterday. The BLS will publish the delayed JOLTS report tomorrow (10am) and the January employment report and CPI on February 11 and 13, respectively.