US EQUITY OPEN: Stocks open with tech outperforming while defensives lag
OPEN: Stocks have opened higher on Wednesday, extending Tuesday's gains, although the Russell 2000 is little changed while the Dow Jones outperforms. The equal-weight S&P 500 (RSP) is posting only modest gains, suggesting more limited market breadth than Tuesday. On a sector basis, Materials, Health Care and Communications lead the upside. Materials are supported by firmer metal prices, with spot gold reclaiming USD 4,200/oz at the time of writing. Utilities, Energy, Real Estate and Consumer Staples lag, extending Tuesday's rotation out of defensive sectors and into technology. Energy stocks are underperforming despite slightly firmer crude prices after President Trump criticised the sector for not lowering retail fuel prices following the recent decline in oil prices.
Crude prices are modestly higher but well off their morning peaks. Earlier gains faded after reports suggested the draft agreement negotiated by Iranian and Omani officials is now awaiting final approval from Iran's Supreme Leader. Meanwhile, Gulf officials told CNN there is a 50:50 chance the US and Iran reach an agreement by Friday, although they cautioned that the Iranian delegation does not include the IRGC, whose approval would ultimately be required for any provisional deal.
In FX, the Dollar is softer against most G10 peers, while the Kiwi underperforms following weaker-than-expected New Zealand employment data overnight. The Yen is seeing modest outperformance.
Treasury yields are slightly higher across the curve, led by the front end, as they track the modest rebound in crude prices and retrace part of this week's rally. The Quarterly Refunding Announcement generated little market reaction after the Treasury maintained its issuance guidance.
US economic data has had little impact. ADP Employment Change disappointed expectations, while the ISM Services PMI missed on the headline despite a rise in business activity and new orders, while employment returned to contractionary territory with prices accelerating higher - generating little market reaction.
STOCK SPECIFICS
- SpaceX (SPCX): Higher-than-expected capital spending on its AI business offset an earnings beat
- Eli Lilly (LLY): Earnings and drug revenue beat; raised revenue guidance
- Advanced Micro Devices (AMD): Higher-than-expected Q2 capex outweighed an earnings beat
- Uber Technologies (UBER): Revenue slightly missed; guidance failed to impress
- Shopify (SHOP): Earnings beat with strong growth across GMV, revenue, gross profit and FCF
- Booking Holdings (BKNG): Earnings beat
- CVS Health (CVS): Adjusted EPS and revenue beat
- Walt Disney (DIS): Adjusted EPS beat
- Lucid Group (LCID): Losses and revenue missed expectations
Session wraps of this kind are read less for the headline index move than for the internals, and the internals here carry the signal: equal-weight lagging the cap-weighted index, defensives underperforming while tech and Materials lead. Rotations of this shape have historically marked risk-on stretches, and the tell for their durability is whether breadth eventually confirms or the move stays concentrated in a narrowing leadership cohort, which in past episodes has preceded choppier tape. The Materials bid resting on firmer gold is a familiar pairing when the dollar is soft against most G10 peers, the two tending to move together through the FX channel rather than through any growth read. The crude complex is the more nuanced thread: prices off morning peaks on reported progress in US-Iran contacts fits the established pattern of headline-driven fade-and-rally trading around negotiations, where the discriminating detail is which actors must still sign off rather than the proximity of a deadline. A front-end-led backup in yields retracing part of a weekly rally, with a refunding announcement passing without reaction, is consistent with supply-neutral sessions where rates take their cue from commodities and positioning rather than issuance. The data slate, soft ADP alongside a mixed services survey with accelerating prices and contracting employment, generated little response, a pattern typical of mid-cycle releases that sit between the prints that actually anchor policy expectations; the follow-ons that matter are the labour and inflation releases further along the calendar.