The Market Brief
U.S. equity futures edged higher in early trading as investors shifted focus to earnings, following weeks of choppy trading from concerns over tech valuations and the conflict in the Middle East.
Impact Snapshot
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Macro Viewpoint
U.S. stock index futures rose Tuesday after strong forecasts from Palantir and ON Semiconductor reassured investors on AI-driven demand, while Middle East developments and earnings kept the focus on the health of corporate America.
Investors are scrutinizing AI-linked results this season for signs that the sector’s heavy investment is paying off. Momentum names often overshoot in both directions, so a momentum unwind should not be mistaken for fundamental deterioration.
The season overall is running ahead of historical standards. Of the 304 S&P 500 companies that had reported second-quarter earnings as of Friday, 85.2% beat estimates, versus the long-term average of 67.5%.
Prime Intelligence
Retail didn’t pull back in July, it reversed. Steady buying gave way to a rush toward the exits as favorite AI trades lost their shine.
For most of the past year, retail cash flows leaned consistently toward buying, chipping away at every dip along the way. That pattern broke hard by the end of July. As conviction in top AI names faded, buying gave way to a swift, outsized wave of selling, one of the sharpest reversals in retail sentiment we’ve tracked.
At the same time, institutional flows told a different story. Asset managers were moderate buyers of equity futures for the week, and leveraged funds covered shorts in Nasdaq futures, adding to the bid. That divergence kept institutional positioning across S&P, Nasdaq and Russell futures near the upper end of its two year range, even as retail rushed the other way.
The Market Brief
In todays brief we break down what the latest volatility and positioning data are signaling for markets. We share our read on where sentiment stands and how we’re positioning from here.
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