Market Overview
The S&P 500 and NASDAQ 100 ended flat after a morning pullback and afternoon bounce. Communication services led, with Meta (META) again outperforming and drawing the flows. There was a rotation into defensive sectors.
The market broke out of a bull flag pattern, pulled back, retested the prior resistance area, and is now trying to challenge recent highs. Volatility fell to about 15 this morning, close to year-to-date lows hit earlier this week. The market keeps buying dips even as yields rise.
Yields are slightly higher on the 10-year rate futures. Rates usually move higher, sometimes a lot higher, about one hour to an hour and a half into the equity session, pushing bond prices lower. Something beyond crude oil appears to be driving this. Yields and crude oil have an inverse link tied to the inflation story. AI funding and rising credit default swaps may also play a part.
Green on the screen this morning came from headlines about a possible US-Iran deal, though the terms look like the same old ones repackaged as new. The US dollar is also rising against the Japanese yen. Traders are watching whether the Bank of Japan or the US Treasury will act to strengthen the yen.
Crude Oil
Brent is below 105; West Texas Intermediate is near $92 a barrel. The $93 to $105 range has been a volatility zone. Early in this conflict, the administration tried to talk markets lower with reports of a near deal. Watch the $88 area as support, close to key moving averages.
Weekend risk stays high on infrastructure. The Houthis keep striking targets in Saudi Arabia. About nine ships crossed the strait yesterday, higher than the recent official count but well below pre-conflict levels.
The key now is byproducts more than crude itself: diesel, aviation fuel, gasoline, and NAFTA. These drive prices down. If diesel falls faster than crude, crack spreads compress. That hurts energy companies, especially refiners, and could help consumers if retail prices fall.
US-China Summit
A high-optics dinner drew top executives, heavy on tech and AI: Lisa Su of AMD (AMD), Lynn Martin of the New York Stock Exchange, Meta (META) CEO Mark Zuckerberg, Jensen Huang of Nvidia (NVDA), Sam Altman of OpenAI, Jane Fraser of Citigroup (C), and Jamie Dimon of JPMorgan Chase (JPM).
Lots of pageantry, little substance. No formal breakdown occurred. The biggest result came early: Scott Bessent announced a two-month extension to the trade truce. China is making some effort on agricultural buying, on track to purchase 25 million tons of soybeans, but lagging on other commitments, likely corn and livestock. The US says China still falls short on rare earths, a point of friction.
The two leaders split on AI. Trump wants minimal AI regulation and an open approach; Xi wants human intervention in AI models. No major fireworks or deal announcements came out, which relieved some but disappointed those expecting big industrial deals.
Akamai (AKAM) - Anthropic Deal
Shares rallied hard in pre-market, trading around $130 after a roughly $20 move up. Akamai (AKAM) signed a $1.6 billion, seven-year deal with Anthropic to support Anthropic's CPU workload demands on Akamai's cloud infrastructure.
Anthropic will receive warrants for non-voting convertible Series B preferred stock, equal to about 7.7 million common shares. About 2% vests at the current commitment; the rest vests if the deal expands up to $9 billion. Capex tied to the deal is about $5.5 billion, including a $1.7 billion increase in 2026 capex. The company is not expected to adjust 2026 revenue guidance, but the deal will affect 2027 revenue guidance. This is a lift for a stock that faced headwinds and was overshadowed by other AI and cloud names working with hyperscalers.
Pure Storage (PSTG)
The best performer in the S&P 500 yesterday, this enterprise data storage firm provides storage solutions, management, and intelligence infrastructure. It raised fiscal 2028 revenue guidance to between $7 billion and $7.3 billion, well above the Street's $6.19 billion. It reaffirmed fiscal 2027 guidance of $5.03 billion to $5.07 billion, in line with expectations.
The company has four growth pillars; its core business is set to take most of the revenue growth and reach about 20% of revenue by fiscal 2030. AI demand shows up in the guidance. Shares traded up about $4 to $5 this morning. Raymond James raised its price target to 140.
S&P 500 Levels
Few flows on the screen this morning, so the focus is technicals. Upside target: 7750. Downside: hold 7660. A higher low on the daily chart adds confidence for a retest of highs and a break out of the three-and-a-half-month consolidation.
