U.S. Futures & World Markets

I'm out tomorrow, so Happy Soul Train Thursday! US equity futures are trading slightly lower this morning after the S&P and Nasdaq snapped their 9-day winning streaks yesterday. Tech is weaker, with the Nasdaq down 1% after Broadcom (AVGO) shares dropped 12% premarket following earnings. AVGO had rallied 50% over the last three months — another example of elevated expectations heading into the print.

There has been plenty of chatter about the upcoming SpaceX IPO. Sometimes retail investors view these high-profile IPOs as "automatic" winners, but investing is never that easy. Stocks are called "risk assets" for a reason. Typically you have to be able to withstand the drawdowns to participate in the gains — and that's easier said than done. The best investments often feel uncomfortable at some point, but do you have the conviction to hold them when they crater lower?

S&P Futures vs. Fair Value: -22.00  |  10-Year Yield: 4.45%

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Charts & Data

S&P has returned 12%/year since 1980 despite an average 14% intra-year drawdown. Peter Mallouk: "The lesson? Volatility doesn't equal a permanent financial loss unless you sell." The most important reminder for long-term investors — especially as volatility picks up.

Magnificent "2" — only GOOGL and NVDA have outperformed the S&P since the start of 2025. Charlie Bilello: "5 out of the 7 Magnificent Seven stocks have actually underperformed the S&P 500 since the start of 2025, a very different picture than 2023-2024." The AI trade has narrowed even within mega-cap tech.

30 major IPOs: the 1-year max drawdown column tells the real story. Truist's Keith Lerner: a look at 30 major IPOs shows how uncomfortable the ride can be, even for eventual winners. Investing in IPOs is never as easy as it looks in the rearview mirror.

Stocks-bonds relationship may be broken — equity drawdowns now come with shallower bond rallies. TS Lombard via Daily Chartbook: "Equity drawdowns are now accompanied by much shallower bond rallies relative to what we were accustomed to previously. The almost 20% drawdown after Liberation Day saw bonds gain just a little over 3% at the peak." The traditional 60/40 hedge is providing less protection in this regime.

Options market sees June 17 Fed day as the biggest event risk of the next month. Bloomberg via Daily Chartbook: the Fed day implied move ranks above CPI (June 10) and the jobs print. Traders are pricing inflation as the key macro variable, not employment.

Bitcoin ETF outflows now a record streak — nearly $4 billion over 12 sessions. Bloomberg via Daily Chartbook: "Investors have pulled nearly $4 billion from US-listed Bitcoin ETFs over the past 12 sessions — a record streak of consecutive outflows." Crypto weakness could be a signal of broader risk-off sentiment beneath the equity surface.

Financials positioning in the 9th percentile — hard to justify given fundamentals. Deutsche Bank via Daily Chartbook: "Positioning in financials remains very light, sitting in the 9th percentile, with plenty of room to add exposure. The underlying fundamentals make it hard to justify this level of caution." The most under-owned major sector by a wide margin.

The median US stock hasn't moved in 4 years — a secular bull analog to 1987-1992. @nullcharts via Daily Chartbook: "Line up the current secular bull with the one that began in 1974, and this consolidation comes at a similar shape and place in the cycle as 1987-1992. Back then, that consolidation set up the launchpad for the final leg higher of the cycle. If the analog holds, we still have ~5 years left in this secular bull."

Excluding tech, the S&P is below its pre-war level. John Authers, Bloomberg via Daily Chartbook: the rest of the market is quietly telling a very different story from the headline index.

Tech's 3-month outperformance of the ex-tech S&P at a record 33%. John Authers, Bloomberg via Daily Chartbook: "This shows tech's rolling three-month outperformance of the S&P 500 excluding tech. At 33%, the latest quarter is the best on record." The divergence between tech and everything else has never been wider.

Tech + Communication Services now almost half of S&P 500 market cap. Bespoke via Daily Chartbook: "Apart from Tech, Communication Services is the only other sector to have added weight in the AI era. On a combined basis, Tech and Communication Services account for almost half of the S&P 500's market cap."

AI suppliers have outperformed AI customers by 230% — the trade has shifted downstream. JPMorgan: "The opportunity set has broadened from the companies funding AI capex to the companies enabling it. Suppliers have outperformed customers by roughly 230%, suggesting the market is increasingly expressing the AI theme through the broader ecosystem rather than only through hyperscalers."

Nasdaq 100 extreme winners: 6 stocks up 400%+ in a year — vs. 22 at the 2000 peak. 3Fourteen Research via Daily Chartbook: "The number of extreme Nasdaq winners today is the highest since 2000, but there is a long way to go to match the mania of the previous Tech Bubble." But: "In 2000 this count rose from 6 to 22 over a seven-month window — these things can get out of hand quickly."

S&P forward 12-month profit margin at a new all-time high. @kevrgordon via Daily Chartbook: "S&P 500's forward 12-month profit margin keeps spiking to new highs." Earnings are the fundamental story driving this market — and right now, that story is very strong.

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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.