Happy Fed/Hyperscaler Earnings Day,

Yesterday amidst another busy day of earnings, which continue to impress, US equity markets pulled back. The S&P 500 fell 0.5% continuing the consolidation that has been underway for the last week and a half. A negative OpenAI story in the WSJ undercut the recent rally in semiconductors and AI capex beneficiaries. The NYSE Semiconductor index fell for the second consecutive day after its 18-day winning streak came to an end on Monday. Coming into today the index was down 5% for the week giving back a little less than half of last week’s rally.

US futures traded on either side of unchanged overnight ahead of a what was expected to be a busy afternoon, but things got started a little early. The big story overnight was the continued move higher in oil with Iran negotiations stalled. There were reports that President Trump reportedly told aides to prepare for an “extended blockade” before he posted “NO MORE MR. NICE GUY!” on social media this morning. Equities were drifting a bit lower after the open but started to pull back a little more aggressively right around noon after Axios reported that President Trump has rejected Iran’s offer and that CENTCOM has prepared for “short and powerful” wave of strikes. Oil prices have extended to the upside and are now up >6% with June ICE Brent/WTI contracts hitting post war highs.

Throughout the session cyclical areas of the market have been pulling back while tech re-found its footing after yesterday’s weakness. Earnings are a big part of that with another round of blowout earnings from semiconductor and memory stocks. Once again losses are reasonably contained.