Major indices are near session lows as investors react to Secretary Bessent’s comments from this morning (more below).

The Magnificent Seven pack is moving moderately lower across the board and most of the heatmap is flat or in the red. There are notable pockets of green, including diagnostic and research names, memory names, software, Insurance, financial data, and railroad names.

Looking further at the major niches, we can see that there is notable strength amongst agriculture and crypto related names.

The move in crypto related names comes as Bitcoin (BTC) continues to get a breakout today. This comes as Trump hosted crypto executives for a meeting yesterday where he pushed Congress to pass the stalled CLARITY Act and ensure American leadership in the space. Additionally, the SEC published their first crypto specific fundraising rule this week, creating exempt offering pathways with a 60-day comment period.

Sector wise, Energy (XLE), Materials (XLB), and Real Estate (XLRE) are catching a bid today. Energy is at the top of the list followed by Materials which are benefiting from a continued increase in commodity prices. On the other hand, consumer-facing sectors are lagging following an adverse reaction to Walmart (WMT) earnings we covered in this morning’s Hotline.

Bessent Comments

Treasury Secretary Bessent gave comments today saying the buyback expansion is about poor liquidity in the 30-year, not rates. He argued that yields do not reflect underlying fundamentals. He said buybacks are already routine, could exceed $4 billion per issue, and are partly a signaling exercise, with more action possible depending on conditions.

He also flagged a push on fiscal consolidation coming at the end of this week or the beginning of next, said there is a very good chance the deficit has peaked with 2026 tariff income roughly what it was in 2025, reaffirmed the strong dollar policy, and called lack of growth the biggest threat to financial stability.

On Iran, he pointed to coordinated economic isolation and said oil markets are misinterpreting what the economic pressure means, while also indicating that this move would make a return to heavy military operations less likely.

AI Capex

Goldman Sachs is projecting AI related capital expenditures (CapEx) to surpass $1T next year and to head higher from there, reaching an estimated $1.64T in 2031, with the largest portion of the CapEx going to compute.