U.S. Futures & World Markets

We saw a brief bounce in stocks yesterday morning, but the selling returned in the afternoon and we're seeing follow-through to the downside in premarket trading. Concerns on the AI trade, and the ability of companies financing their massive infrastructure spending with increasing debt, has put a lid on this tape.

While everyone frets about the recent weakness in semiconductor stocks, let's widen the lens. The SMH is down 7.2% over the last five days, but it is still up +52% year-to-date, and is up +285% over the last three years. A rough couple of weeks don't exactly erase those gains. There are legitimate concerns on valuations and the AI buildout — but stocks don't move in a straight line. It's actually a sign of a bullish tape to see some profit-taking after a massive run.

S&P Futures vs. Fair Value: -26.00  |  10-Year Yield: 5.08%

CORE Headlines

Charts & Data

NDX has yet to break out of its trading range in either direction despite the violent moves beneath the surface. Futures are bouncing from extremely oversold levels, while the 200-day moving average still sits lower. Chasing momentum breaks in either direction has been a costly strategy over the past six months. The Market Ear via Daily Chartbook.

Information Technology was the most net-sold sector, with net selling reaching the highest level on record. Goldman via The Market Ear.

US Fundamental L/S Net leverage fell -3.2 pts — the largest weekly decline since Liberation Day in April 2025 and the 4th largest in the past five years — to 43.7% (0th percentile five-year). Contra-indicator? Goldman via The Market Ear.

NDX forward P/E has compressed to 20.5x, its lowest level since the AI cycle began in 2023. The index now trades at just a 1.8x premium to the S&P 500, the narrowest in nearly a decade. Semis have led the valuation collapse, with forward P/E plunging from around 29x this summer to just 17x today. Goldman via The Market Ear.

VIX call volume surged to its second-highest level in five years, surpassed only by August 2, 2024, just before VIX exploded above 60 the following Monday. Quite a shift in investor behavior. Goldman via The Market Ear.

Equities, particularly tech, have started to reflect credit market deterioration, but the divergence remains striking. NDX is back around mid-September levels, while CDX IG spreads have widened dramatically over the same period. The Market Ear via Daily Chartbook.

NVDA and AVGO CDS spreads continue to widen. NDX has largely followed the deterioration in credit markets — the pressure remains firmly intact. The Market Ear via Daily Chartbook.

Roughly 80% of AI ecosystem revenues are still tied to recycled capex rather than demand from outside the ecosystem. The critical question is when genuine end-user demand starts catching up with the investment boom. TS Lombard via The Market Ear.

Apple is trading near all-time highs, closing in on Nvidia as the world's most valuable company. Its rolling two-month correlation with the NDX has turned negative for the first time in history — the ultimate defensive play within tech. Goldman via The Market Ear.

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