Index	Advancers	Decliners
NYSE	60.65%	36.33%
NASDAQ Composite	52.33%	43.67%
S&P 500	69.40%	30.00%
S&P 400	70.75%	28.75%
S&P 600	64.00%	35.50%

Yesterday was a perplexing session, but better than imagined. Large-cap core, growth, and momentum took it on the chin, weighing down major indices, but breadth was impressive (see above). Even the NASDAQ Composite sported more advancers than decliners on the session.

New Comfort Zone

And the more nuanced picture of factors was very encouraging, as buyers rotated back into mid-caps and small-caps. Despite higher-than-average valuations for small-caps and lower-than-average valuations for “Mag Seven,” the comfort zone has shifted.

Sector Performance

As you know, I’ve considered the Financials' (XLF) performance this year a yellow flag, so it was good to see them perform better yesterday.  XLF closed at its 200-day moving average, but the rate of change (ROC) remains abysmal.

Don’t Overthink This

 

You’ve seen those “A Beautiful Mind” memes with formulas floating in the air; well, that’s what comes to mind when I read about Wall Street's efforts to hedge wild gyrations. I think these complicated approaches add more risk and volatility. There is a part of the Street that makes big money off increased volatility, too. Don’t overthink this period of wild internal gyrations and changing narratives.

Jack Being Nimble

 

A blockbuster (pun intended) news release from Block, Inc (XYZ) (formerly known as Square), founder Jack Dorsey, reports that the company is laying off 40% of its workforce. It will save the company $600.0 million annually, which is ironically how much Jack’s net worth increased last night after shares surged 22% on the news.

Dorsey says the company is healthy, but needs fewer workers due to automation. The stock's performance might have been another motivator.

 Worker Headcount:

• 2019: 3,835
• 2020: 5,477
• 2026: Less than 6,000

Not Just Jack

The Dominos Are Falling

The Block news comes on the heels of the Citrini Research report, which drew an avalanche of rebuttals.  Their dire outlook for 2028 sent stocks lower and set heads on Wall Street on fire. Ironically, the mass firings they warn of are sending stocks higher, not lower.

And then some say poorly run companies will use artificial intelligence (AI) as an excuse to lay off workers. That may be the case for C3.ai Inc (Al), which became a hot stock after the introduction of ChatGPT, thanks to its fortuitous stock symbol. The company announced laying off 26% of its workforce, and shares tumbled.

Today’s Session

OpenAI continues to raise mind-boggling amounts of cash. This morning's total of $110 billion comes from three sources:

• Softbank: $30.0 billion
• Nvidia (NVDA): $30.0 billion
• Amazon (AMZN): $50.0 billion

The market was already under pressure when this deal was announced.  Although PPI came in stronger than expected, it has little to do with this morning’s weakness.

All the names involved are in the red during pre-open trading.

There’s general angst in the air now that has triggered selling in big winners, but no signs of meaningful rotation elsewhere.  Yesterday, for instance, the tables turned quickly, and investors sold Nvidia (NVDA) and bought Salesforce (CRM).

This morning, both are poised to open lower with the latter under heavy pressure.

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