Where we are: S&P 500 futures are currently trading at 7588.25, virtually unchanged on the day. The overnight range has been tight, between 7573.25 and 7595.75. This level is just below yesterday’s cash close of 7563.60, suggesting a slight consolidation after a strong run.
What’s driving it: The underlying US macro picture remains supportive, with the 10Y real yield continuing to drift lower to 2.09%, a tailwind for risk assets. However, the market is awaiting fresh catalysts, with no major US data releases scheduled before the New York open. The DXY is slightly firmer at 99.01, providing a modest headwind, while the 10Y yield is mirroring this with a slight uptick to 4.439%.
- Dell’s impressive AI server revenue growth of 757% has fueled positive sentiment, evident in the pre-market surge of its stock, underscoring the ongoing AI-driven market narrative.
- Speculator positioning in the S&P 500 remains modestly short, with net non-commercial contracts at -134,906. This relatively neutral stance (60th percentile) suggests limited squeeze potential in either direction.
- WTI Crude remains under pressure after recent geopolitical news, still sitting below $100, alleviating some inflation concerns and supporting risk sentiment.
NY session focus: All eyes will be on the sustainability of the AI rally and any fresh developments regarding the US-Iran discussions around Strait of Hormuz vessel flows. Watch for reactions around 7600, a key psychological level for the S&P 500. A break above this level could trigger further upside, while a failure to hold 7570 could invite a test of the lower end of the overnight range. The working trade remains long AI names and beneficiaries. The pain trade is a sudden hawkish shift in Fed rhetoric that spooks the bond market.