The market remains trapped near the flat line amid US-Iran headlines, and AI momentum takes a pause.

Seven sectors are in green with Consumer Discretionary (XLY) in the lead driven by gains in airlines, home builders, and cruise lines. Consumer Staples (XLP) is another outperformer as investors do some bargain hunting outside hot stocks. Technology (XLK) is one of the worst performing sectors with profit-taking across semiconductor names, which is also sending the PHLX Semiconductor Index (SOX) down 2% following yesterday’s rally.

The negotiations between Iran and the US continue with the Trump administration denying reporting from Iranian state media suggesting the two sides are close to finalizing a memorandum of understanding that would restore traffic through the Strait of Hormuz. Despite the recent headlines, oil is down 4% per barrel.

It’s been a quiet day for yields with the market now fully pricing a rate hike by next March.

Today’s 5-year auction results was a bit worse than yesterday’s 2 year note. The auction drew a high yield of 4.182%, vs a when-issued yield of 4.181%.

Richmond Fed non-manufacturing activity improved in May, with the revenue index increasing to 14 from 9, signaling solid services activity and consumer demand.

AI Update

Farsight AI launched Freeform, an AI agent for financial services teams that can create full client-ready deliverables from one prompt. This could further bridge the gap between generative AI and the structural complexity of finance documents.