U.S. Futures & World Markets

Happy Soul Train Friday! It's about time we saw stocks under a little pressure premarket. Spiking Treasury yields, concerns over sticky inflation data, and higher-for-longer crude oil prices have investors taking some profits off the table.

The market has been essentially a one-way move higher for the last six weeks, so it's refreshing to see some consolidation. Some pause at current levels would do the tape good longer-term. It might not be what the meme crowd or traders loading up on 0DTE call options on semiconductor stocks want to hear, but long-term investors can feel comfort in it.

With all the discussion around AI hype and market concentration, Datatrek Research summed up the market's longer-term outlook well:

"The US stock market now reflects both the history and the promise of disruptive technology, with issues like economic growth and non-Tech industrial structure playing (at best) a strong supporting role. Thirty years of dramatic, compounded growth in computing power per dollar has overwhelmed much slower improvements anywhere else. Now, Generative AI holds out the possibility of a fresh expression of that computing power — as well as potentially highly concentrated monetization of that technology."

Datatrek Research

In other words, this market continues to revolve around one central theme: investors still believe AI will justify the massive concentration and valuations we're seeing in large-cap tech.

S&P Futures vs. Fair Value: -65.00  |  10-Year Yield: 4.54%

CORE Headlines

Charts & Data

Past market melt-ups in context. Ritholtz Wealth: a chart mapping prior market melt-up periods shows that the current run, while impressive, is not without precedent — and that melt-ups often continue longer than bears expect before reversing.

Why the K-shaped economy exists: homeowners at 70% equity. Bespoke: "As a reminder, homeowners are sitting on 70% equity, the highest levels since 1960." Those who own assets are doing well. Those who don't are getting squeezed by inflation.

Household financial stress at multi-year low. Torsten Slok, Apollo: "The share of consumers who expect to miss a minimum debt payment in the next three months just hit its lowest level in several years. The bottom line is that households are feeling better about their finances."

Rate hike now the base case. The Kobeissi Letter: "Interest rate futures now see the base case for the next Fed move being a rate HIKE. The odds of the Fed cutting rates before July 2027 are a mere 1%. As inflation hits its highest level since 2023, the Fed is left with no option. Rate hikes into stagflation are coming."

Healthcare is the only sector creating jobs. Charlie Bilello via WSJ: "Healthcare and Social Assistance have added nearly 1.8 million private-sector jobs in the US since the end of 2023 while all other industries combined have lost 127,800 jobs."

Q2 GDP tracking at 4.0%. Augur Infinity via Daily Chartbook: the Atlanta Fed's GDPNow model estimate for Q2 GDP growth improved to 4.0% from 3.8%. A strong growth backdrop even with higher rates.

30-year Treasury hits 5% for first time since 2007. Elizabeth Stanton, Bloomberg via Daily Chartbook: "Investors snagged 5% yields on 30-year Treasuries for the first time since 2007, as surging energy prices push inflation — and expectations for more of it — higher." An important psychological threshold crossed.

US equity inflows running at half the December 2024 peak pace. Bloomberg via Daily Chartbook: "Global investors poured $14 billion into US equity funds on average in each of the past 12 weeks — only about half of what was seen when inflows last peaked in December 2024. Adjusted for the share-price rally since then, the reading drops to about one-third." The rally has been running on less fuel than it appears.

Margin balances surging at retail brokers. Goldman Sachs via Daily Chartbook: "Margin balances at several retail brokers have surged." Leverage in a momentum market is fine on the way up — and painful on the way down.

Active managers took sharpest profit-taking in over a year. NAAIM via Daily Chartbook: "Active managers took profits on US equities over the past week — the sharpest drop in the NAAIM Exposure in over a year." The professionals are trimming.

Hedge funds all-in on tech at 5-year highs. Goldman Sachs: "Gross and net allocations to Info Tech, as a percentage of the total US Prime book, are now sitting at or near five-year highs, ranking in the 100th and 99th percentiles, respectively." When everyone is crowded into the same trade, the exit can get messy.

S&P 500 opening tick higher than prior day for 24 of last 31 sessions — historically bullish. Odd Stats via Daily Chartbook: every prior instance of this signal since 1950 was looked at, and the forward return data was notably constructive.

99 stocks up 20%+, 63 stocks down 20%+ — massive dispersion. @leverageshares via Daily Chartbook: "The dispersion inside the S&P 500 this year has been massive. While 99 stocks are up more than 20%, 63 names are down at least 20%, showing just how selective this market has become." Active management matters in an environment like this.

Semi rally vs. prior bubbles — still room to run, or at peak? Bespoke: "The semis have run up a similar amount to the Homebuilders in the first half of the 2000s and still have plenty more to run. Alternatively, assuming today is the peak, the semiconductors' rally would hardly stack up to these other bubble examples." The jury is out.

Strip out AI infrastructure and S&P earnings growth is basically flat. RIA Advisors via Daily Chartbook: "AI infrastructure stocks have seen 2026 earnings estimates jump 55% since December 2024, versus just 7% for the broader S&P 500. Strip them out and earnings fall 1%. The concentration risk is obvious."

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This content does not constitute legal, tax, accounting, or other professional expert advice. Everything published is believed to be reliable, but its accuracy or completeness is not assured. Past performance does not indicate future results. The opinions expressed herein are subject to change without notice and are solely those of the author as of the date indicated.