Major indices are moving higher across the board despite oil and longer dated yields edging higher on the renewed skirmishes in the Middle East.

Most sectors are moving higher, except for the more rate sensitive sectors of Real Estate (XLRE) and Utilities (XLU). Materials (XLB) are in the lead as metal commodities edge higher. Notable pockets of green in fertilizer and steel names are also helping the sector. Meanwhile, Communication Services (XLC) is the runner up with most names in the sector moving higher. Meta Platforms (META) is leading the sector higher following the launch of their new Muse Voice Transcribe AI model (more below).

AI update

Nvidia (NVDA) CEO Jensen Huang spoke with Commerce Secretary Lutnick at the G20 Innovation Ministerial, urging member nations to accelerate AI adoption framing AI as national infrastructure. He argued every country needs to build its own. He emphasized the five-layer cake framing with energy at the base, followed by chips, data centers, models, and data and applications on top.

Anthropic is in the news following the release of their new Fable 5.1 which shows a sizable improvement on benchmarks compared to prior models and peer models. Additionally, Secretary Lutnick gave comments indicating that the company is back on the right side of the administration.

Meanwhile, Alphabet (GOOG/L) released Gemini 3.8 Flash, which shows improvement over its prior model and comes in at a fraction of the token cost of frontier models. Flash is Google's cheaper workhorse tier rather than a frontier flagship, on overlapping benchmarks Fable 5.1 still scores higher, albeit at a much steeper price per token.

As noted, Meta is also joining the string of new model launches with Muse Voice Transcribe, a real-time transcription model that ranks first on third-party streaming speech-to-text benchmarks.

Economic Data

The ADP employment data for August showed a 38K gain from last month’s 46K increase, below estimates of a 47K rise. Large companies saw the largest increase while small businesses saw an interesting dichotomy. The smallest 1-19 employee firms showed a large increase, while the 20-49 employee cohort saw the most notable decrease.

Industry wise, manufacturing and professional services saw the steepest declines, while construction, leisure and hospitality, and education and health services saw the bulk of the increase.

New orders for manufactured goods rose 0.9% M/M in July, rebounding from the revised 0.2% dip in June, beating expectations of a 0.6% increase.

Most categories saw an increase with both durable and non-durable goods rising overall. The largest increases were in primary metals and transportation equipment, while the only components contracting were computers and electronic products as well as electrical equipment, appliances, and components.

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