Morning Brief
Headline News:
Equity futures point to a lower open this morning after stocks closed mixed yesterday amid a whirlwind of geopolitical developments. Yesterday’s trade saw the market balance inflationary concerns tied to the sharp rise in oil prices against optimism that the conflict in Iran will not drag on longer than anticipated.
The decisive move lower in equity futures, coupled with a rise in treasury yields, suggests the market is now not so sure that the conflict will remain contained or that its economic fallout will prove fleeting.
Reuters reported late yesterday that Iran will attack any ship traversing the Strait of Hormuz, a headline that has seen crude oil futures rise nearly 7% this morning after closing 6% higher yesterday.
Additionally, NBC News reported that Iranian drones hit the U.S. Embassy in Riyadh, Saudi Arabia, further stoking concerns that the conflict might be far from de-escalating.
Elsewhere, mega-cap tech and software names are giving back some of yesterday’s strength in the premarket after a solid session yesterday that helped the major averages overcome the bulk of their early weakness.
Corporate newsflow has taken a backseat amid the geopolitical turmoil, though there are a few notable earnings moves in the fold this morning.
There are no economic data releases of note scheduled for today.
(Michael Gibbs, Managing Director, Lead Portfolio Manager |)
Markets:
The S&P 500 opened sharply lower yesterday, briefly testing the lower Bollinger Band before buyers stepped in aggressively. The intraday reversal pushed the index back higher, closing at 6,881.62. The ability to rebound from the lower volatility band suggests short-term oversold conditions, though the broader technical picture remains fragile.
The U.S. 10-year Treasury yield has fallen to 4.04% amid intensifying geopolitical tensions over the Iran conflict. The drop in yields reflects a classic flight-to-safety trade, with capital rotating into Treasuries amid rising uncertainty.
This morning, S&P 500 futures are down 1.71% as reports indicate the conflict is spreading across the region. A lower open appears likely, and downside momentum could accelerate if key support levels fail early in the session.
The first important support level sits at 6,775.50. A decisive break below that level could open the door to a more significant retracement toward 6,279.43. That lower level would represent a meaningful correction from recent highs and could test intermediate-term trend support.
Energy markets remain critical. A sustained rise in crude oil prices would increase inflation expectations and potentially delay the Federal Reserve’s easing bias. Higher oil prices could simultaneously pressure profit margins and consumer spending, creating a more challenging macro backdrop for equities.
John N. Lilly III CPFA
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJFS
Partner, DJWMG
Windsor Wealth Planners & Strategists
Futures trading is speculative, leveraged, and involves substantial risks. Investing always involves risk, including the loss of principal, and futures trading could present additional risk based on underlying commodities investments.
The Relative Strength Index (RSI), developed by J. Welles Wilder, is a momentum oscillator that measures the speed and changes of price movements.
The percentage of stocks trading above a specific moving average is a breadth indicator that measures internal strength or weakness in the underlying index. The 50-day moving averages are used for short-to-medium-term timeframes, while the 150-day and 200-day moving averages are used for medium-to-long-term ones. Signals can be derived from overbought/oversold levels, crosses above/below 50%, and bullish/bearish divergences.
The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index.
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The Nasdaq 100 (^NDX) is a stock market index made up of 103 equity securities issued by 100 of the largest non-financial companies listed on the NASDAQ. It is a modified capitalization-weighted index. It is based on exchange and not an index of U.S.-based companies.
The Russell 2000 Index is a stock market index that measures the performance of the 2,000 smaller companies included in the Russell 3000 Index. It is managed by London’s FTSE Russell Group and is widely regarded as a bellwether of the U.S. economy because it focuses on smaller companies that focus on the U.S. market.
The NYSE advance/decline measure refers to the number of common stocks listed on the New York Stock Exchange (NYSE) that close at a higher price than their previous closing price (“advancing issues”) compared to the number of NYSE-listed common stocks that close at a lower price than their previous closing price (“declining issues”) during a specified trading session.
This measure is used as an indicator of market breadth and reflects the extent to which price movements are broadly distributed among NYSE-listed securities.