US STOCKS: Big Tech Drags The Market Up

The ESU5 overnight range was 6279.25 - 6370.00, Asia is currently trading around 6362. The ESU5 contract found good demand around the 6250 area, its first level of support and bounced strongly overnight. The market seems to be concentrating on the potential rate cuts coming and ignoring the worries about growth that would make the cuts possible for now. This morning has seen US futures open a little higher, ESU5 +0.11%, NQU5 +0.15%. The broader market also saw good demand across the board, Dow Transports +1.06% , Regional US Banks +1.31%, Russell +2.10%. Price bounced strongly off its first support around 6200/6250, I suspect bounces back towards 6350/6400 should now initially find sellers. A break below 6200 is needed to potentially signal a deeper correction back to the 5900/6000 area.

• Lance Roberts(RIA) - “The market appears vulnerable to additional downside pressure soon, especially if upcoming economic data (like ISM Services and productivity reports) disappoint. However, unless selling accelerates through key support at the 50-day moving average(6150), this pullback could ultimately serve as a reset for an overbought market.”
• Michael A. Arouet on X: “Eye-opening chart, S&P 490 has had no earnings growth since 2022. Is the economy really strong?” See Fig.1 Below.
• David Rosenberg on X: ”The virtual stalling-out in payroll growth in the past three months has been a recession predictor with 100% accuracy over the past six decades. Score a win for Bowman and Waller, whose crystal balls are clearer than the rest of the FOMC pack."
• ISABELNET on X: “Systematic strategies have increased their equity exposure to the 84th percentile, while discretionary investors have lowered theirs to the 30th percentile, highlighting a significant divergence.” 
• Bloomberg - “S&P 500 earnings are crushing 2Q expectations -- up 9.1%, triple the preseason forecast and the strongest beat rate since 2021. But now, with stocks near all-time highs, the question is whether this recovery still has legs. Profit growth, which peaked at about 13%, is expected to decelerate to 6.8% in 3Q and 6.7% in 4Q and then pick up again into early 2026. Management sentiment is at an eight-year high, yet guidance tells a more cautious story with concerns about tariffs and rising costs.”

Fig 1: S&P 490 Vs Top 10

Source: MNI - Market News/@MichaelAArouet/SocGen

• South Korea: Recorded inflows of +$31m yesterday, bringing the 5-day total to +$630m. 2025 to date flows are -$5,369. The 5-day average is +$126m, the 20-day average is +$191m and the 100-day average of -$10m.
• Taiwan: Had inflows of +$495m yesterday, with total inflows of +$1,096 m over the past 5 days. YTD flows are positive at +$3,011. The 5-day average is +$219m, the 20-day average of +$312m and the 100-day average of +$150m.
• India: Had outflows of -$165m as of the 1st, with total outflows of -$2,001m over the past 5 days.  YTD flows are negative -$11,173m.  The 5-day average is -$400m, the 20-day average of -$142m and the 100-day average of +$35m.
• Indonesia: Had outflows of -$62m yesterday, with total outflows of -$207m over the prior five days.  YTD flows are negative -$3,815m.  The 5-day average is -$41m, the 20-day average -$20m and the 100-day average -$31m.
• Thailand: Recorded inflows of +$81m yesterday, with inflows totaling +$135m over the past 5 days. YTD flows are negative at -$1,815m. The 5-day average is +$27m, the 20-day average of +$28m and the 100-day average of -$12m.
• Malaysia: Recorded outflows as of -$49m yesterday, totaling -$113m over the past 5 days. YTD flows are negative at -$3,000m. The 5-day average is -$23m, the 20-day average of -$13m and the 100-day average of -$17m.
• Philippines: Recorded outflows of -$4m yesterday, with net outflows of -$10m over the past 5 days. YTD flows are negative at -$629m. The 5-day average is -$2m, the 20-day average of -$4m the 100-day average of -$4m.

TYU5 is trading 112-15, up 0-03 from its close. 

• The US 2-year yield opens around 3.665%, down 0.01 from its close.
• The US 10-year yield opens around 4.185%, down 0.1 from its close.
• Bloomberg - “The Fed may need more than two rate cuts this year, Mary Daly told Reuters. “I was willing to wait another cycle, but I can’t wait forever,” she said.”
• Bloomberg - “Banks are generally lowering spreads on the loans they do approve for larger borrowers. The latest SLOOS report points to slowing credit growth in the year ahead as banks become more discerning in their lending practices — especially for smaller and unsecured borrowers.”
• Peter Schiff on X: “Rate cuts are not a lock for September as the inflation data will likely come in hotter than expected between now and the next Fed meeting. The fact that markets are rallying in anticipation of rate cuts makes them even less likely. Stronger inflation trumps weaker job growth.”
• The 10-year yield had a powerful move lower in reaction to the NFP data, breaking below its 4.30% pivot within the wider range 4.10% - 4.65%. This now turns momentum lower in yields and you could expect buyers of treasuries on bounces back towards 4.30/35% now looking to initially test the 4.10% area. 
• Data/Events: Trade Balance, S&P Global PMI’s, ISM Services