U.S. Futures & World Markets

Fed Day, a deluge of corporate earnings (Meta and Microsoft report after the bell), lingering worries over AI capex spending, and renewed tensions in Iran all have investors on edge today. S&P futures trade slightly higher as we head into an important day for the market.

While investors expect the Fed to hold rates steady at 2 PM ET, Fed Funds Futures are still pricing in a 35% chance of a hike. The WSJ summed up the AI trade's predicament: investors' all-in bet on American AI was underpinned by two rosy assumptions — that Washington could maintain an insurmountable tech lead, and that massive data center investment would be rewarded with commensurate profits. Both are looking wobbly at the same time.

Per Datatrek Research: the S&P 500's forward PE multiple is down 10% YTD despite strong corporate earnings growth — primarily due to uncertainties around AI capex return on invested capital. Tech's forward PE is down 14% on the year. Microsoft and Meta will be a big test tonight.

S&P Futures vs. Fair Value: +14.00  |  10-Year Yield: 4.63%

CORE Headlines

Charts & Data

NDR believes markets may be underestimating the possibility of a near-term rate hike — and emphasizes the Fed's need to maintain inflation-fighting credibility. Ned Davis Research via Daily Chartbook: the case for a hike is more serious than the market is pricing.

30-year mortgage rates today seem really high — until you take a longer historical view. Peter Mallouk: context matters for both clients and investors worried about housing.

Growth stocks trading at their weakest relative level since April 2024 — "this chart now leans risk-off." The Daily Number via Daily Chartbook: the momentum trade's leadership has fully broken down.

QQQ opened 1%+ higher yesterday but reversed negative — historically, QQQ was positive 100% of the time two weeks after such gap-up reversals, with a median 2.6% gain. @bluekurtic via Daily Chartbook: a potential bear trap setting up.

Hedge funds sold the most global Information Technology equities in 3 days since September 2024 — one of the largest in the past 5 years. Goldman Sachs via Daily Chartbook: institutional selling at historically extreme levels.

Hedge fund positioning across consumer stocks near 3-year lows — Consumer Discretionary in the 11th percentile, Consumer Staples in the 6th percentile. Goldman Sachs via Daily Chartbook: the most unloved sectors by a wide margin.

Interesting Reads

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