Where we are: Dow futures are currently trading at 50616, up 107 points, or 0.21%, after printing an overnight high of 50797. The cash Dow closed yesterday at 50462, and futures trading suggests the market will attempt to recapture that level at the open. The S&P 500 and Nasdaq futures are also pointing to fresh record highs, setting a positive tone for the session.
What’s driving it: The rally in tech is the primary driver, extending gains seen in the prior session. No fresh domestic catalysts exist this morning. The overall risk-on mood is being supported by easing energy prices, with WTI crude pulling back from recent highs. US 10-year yields are slightly lower at 4.468%, providing a tailwind, while the 2-year yield is holding steady at 4.041%.
- The 2s10s spread continues to widen, sitting at 0.49%, steepening 6bp on the day.
- The VIX remains subdued at 16.59, suggesting limited near-term volatility expectations.
- Net non-commercial positioning in Dow Jones futures is moderately short, with -10,765 contracts, up 7,203 w/w, at the 21st percentile. There is no short-squeeze risk.
NY session focus: With no major US data releases scheduled before the open, the focus will remain on the tech sector and overall risk sentiment. Watch for any reaction to Salesforce earnings after the bell. Key level to watch on the Dow is the overnight high of 50797; a break above that could trigger further upside. Support lies at 50500. The current trade is to buy dips in tech, but the risk is that the rally becomes overextended. The pain trade for the Dow would be a sharp reversal in tech stocks, triggering a broader market selloff.