Major indices are lower across the board following continued Middle Eastern tensions.

Most of the weaknesses is concentrated in AI-related names: the niches of semiconductors, Industrials (XLI), and Materials (XLB). However, outside these niches the heatmap is green with several notable pockets of strength, including travel, retail, and fintech names.

Most of the defensive sectors are moving higher this afternoon. Health Care (XLV), Consumer Staples (XLP), and Utilities (XLU) are at the top of the list. They are joined by Energy (XLE), getting a boost from energy commodities moving higher.

While semiconductors are pushing Technology (XLK) to the bottom of the sector list, software (IGV) names are catching a bid following yesterday’s underperformance.

Iran Update

At the open Trump took to Truth to say that talks with Iran are no longer in progress and the naval blockade will remain in force. Subsequently oil prices have edged higher.

Despite the move in oil, the Ten-Year Treasury Yield (TNX) has reversed its early morning gains and is now lower by 1.2 basis points and holding below the 4.75% level.

Illustrating Leveraged ETFs

This graph helps to illustrate the effects of leveraged ETFs as their rise in popularity has pushed their Assets Under Management (AUM) to ~$180 billion, while their exposure is much higher at ~$420 billion due to their leveraged nature.

Economic Data

Industrial production rose 0.2% M/M in July, decelerating from the prior 0.3% gain and below estimates of a 0.3% gain. Similarly, Manufacturing production for July decelerated to a 0.2% M/M gain from the prior of 0.3% and came in-line with estimates of 0.2%.

Consumer goods were the only group that saw a decline as durable consumer goods fell 1.4% M/M and non-durables declined 0.1% M/M. This contributed to the deceleration in final products and thus the total index. This was partially offset by accelerations in business equipment, construction, and utilities.

Pending home sales in July fell 2.3% M/M following a downwardly revised 4.8% decline in June and missing the forecasted 0.3% rise.

All major regions showed declines with the West region showing the steepest fall, while the Midwest region held up the best.

We are keeping our powder dry this afternoon.

Comments

Charles come back. The "B" Team is not doing a good job filling in for you. Rick Chassey on 8/18/2026 6:20:54 PM

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