Where we are: S&P 500 futures are trading around 5345, inching higher after an overnight range between 5330 and 5350. This puts the contract comfortably above yesterday’s NY close and suggests the cash market is set to open at new all-time highs. The risk tone remains constructive, mirroring the late-day bid seen yesterday.
What’s driving it: The market remains underpinned by resilient earnings and the ongoing AI narrative, with Cisco’s strong results and investment plans adding fuel to the fire. Domestically, the focus is squarely on this morning’s 08:30 ET retail sales data, which will provide further insight into the strength of the consumer and the potential implications for Fed policy. The rise in the US 10Y Real Yield to 1.99% is a potential headwind, but so far the market is shrugging it off.
- Cisco’s 15% premarket surge after earnings, driven by AI investment plans, exemplifies the market’s continued appetite for tech growth.
- The US 10Y real yield is pushing higher, trading up 4bp to 1.99%, potentially challenging equity valuations.
- Speculator positioning in the S&P 500 remains modestly short, but the 77th percentile reading suggests limited room for further shorting.
NY session focus: All eyes are on the 08:30 ET release of Core Retail Sales and Retail Sales data, alongside Unemployment Claims. A strong print would likely reinforce the hawkish Fed narrative and could pressure equities, while a miss could provide a fresh boost. Key levels to watch are 5330 as initial support and 5360 as the next upside target. The outperformance of tech and AI-related stocks remains the prevailing trade. The pain trade would be a significant hawkish surprise from the retail sales data, triggering a sharp rates selloff and equity correction.