It’s a mixed session, with indices moving near the session high. The S&P 500 is testing its baseline and attempting to reverse into the green. It would be compelling to see the index break out of its prior high and pass the double top test.

The Russell 2000 (IWM) continues its stretch of outperformance, as small-cap stocks react positively to the promise of friendlier monetary policy conditions. So far, the index is outperforming the Magnificent Seven.

Mega cap names are mostly moving lower, as investors react to Oracle’s (ORCL) earnings that showed a revenue miss, contributing to AI plays underperformance today. Nvidia (NVDA) is leading the magnificent seven lower after Rivian (RIVN) announced they are developing their own AI chip to replace Nvidia (NVDA) hardware in their cars. In addition, Sam Altman hinted at a possible OpenAI chip.

Most of the sectors are in the green and being led higher by Materials (XLB), as precious metals rise. Furthermore, Financials (XLF) are the runner-up, led higher by insurance and credit card names which stand to benefit from lower rates.

Communication Services (XLC) and Technology (XLK) are the only two sectors lagging.

Ten Year Treasury Update

Following yesterday’s FOMC meeting, the ten year treasury yield (TNX) is continuing to move lower, down 5 basis point to approximately 4.11%.

Economic Data

The US trade deficit in September narrowed to $52.8 billion, the smallest reading since June 2020. Growth of exports came in at 3% M/M, making it the best month for exports since April 2022. This more than offset the 0.6% M/M rise in imports.

Last week initial jobless claims rose by 44K from the prior week to 236K, surpassing estimates of 220K. This was the biggest increase in initial jobless claims since July 2021.