Yesterday markets followed up Star Wars Day (May the 4th) by celebrating Cinco de Mayo with a rally that recouped Monday’s loss and then some. US military leadership said Iran’s attacks were below the threshold of restarting major combat operations. The S&P 500 gained 0.8% to close at a new all-time high while small and midcap indices were up ~1.5%. Semiconductors continued to lead to the upside with the NYSE Semi Index up >4%, bringing YTD gains to 60%. And guess what? They are up sharply again today. Oil prices and Treasury yields both moved modestly lower.

Today we follow up Cinco de Mayo by going deeper into the Star Wars holiday catalogue with a celebration on Revenge of the Sixth. There was a lot of Iran news this morning, and it was generally positive, pointing to potential agreement between the US and Iran. The S&P 500 is up 1%. The equal-weight is lagging a bit. The Russell 2000 is about inline with some solid gains in thematic/high beta areas (Space, Quantum, etc.).

Comm Services, Industrials and Materials are leading higher. The semis group is having another day of sharp gains, propelling Tech. The force is strong with them. AMD is up 15% on earnings, driving the AI story today though there are plenty more joining the caravan. Energy is the main laggard on crude’s decline, and Staples (ag traders lower), Healthcare (a few sharp decliners on earnings) and Utilities are lagging.

Brent crude is down ~7% ~$102 (LOD $96.75) on the Iran news. Precious metals continue to rally with crude and yields lower. Ag is also lower and crypto is flat to lower as Bitcoin settles in after a solid move higher since Friday. Treasuries are bid today with oil falling and the refunding update, pushing yields down 5-8bp across the curve and the Dollar lower as well. The US Dollar Index fell below its 200d ma ~98.40, currently at $97.90. Around midnight there was another sharp rally in the Yen, presumably intervention related, that took it to ¥155, but it has weakened from those best levels, currently back around ~¥156.40.