It was a mixed session coming out of the long holiday weekend. Reports of progress in nuclear talks between Iran and the US helped stocks early on, continuing to pressure crude (down ~3%) however, yields saw no benefit from that rising ~5bp across the curve. The S&P 500 fell 0.4% with notable weakness in the mega-cap tech stocks (NYSE FANG+ -2.6%). Hyperscalers were the main target with that value continuing to accrete to semis and memory companies with the DRAM ETF climbing to new heights. Small and midcap indices ended with modest gains helped by strength in REITs, healthcare and financials. Energy stocks also ended higher despite the decline in oil with refiners picking up the slack.

A night’s sleep didn’t help matters. Asian equites were under significant pressure overnight, especially the high-flying chip/memory names which bled into European markets and US futures. The S&P 500 opened down ~1.5% nearly tagging its 50d ma (~7,340) but has since recouped some of those losses. Tech is once again bearing the brunt of the selling but the contours of that have changed with semis and particularly memory stocks getting hit hard (NYSE Semi -7%, DRAM ETF -12%). Much of the tech unwind seems to be positioning related. Outside of memory there wasn’t a particular headline that triggered the weakness but rather a culmination of narratives that have been evolving over the last couple of weeks, which we’ll touch on more below. Outside of the tech weakness the breadth is actually pretty solid with adv:dec in the S&P 500 ~1.5:1. Defensives, yield oriented sectors and YTD underperformers are leading to the upside.