See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“People never lie so much as before an election, during a war, or after a hunt.” – Otto von Bismarck

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Paul Hickey appeared on CNBC’s Morning Call with Morgan Brennan today to discuss AI and other factors impacting the market. To view the segment, click on the image below.

The rally in US equities is taking a breather this morning as the S&P 500 is indicated to open down 0.1%, and the Nasdaq is trading down by 0.25% as both are off their overnight highs. The lack of continued upside momentum comes as Treasury yields and crude oil are both slightly higher. Gold and Bitcoin, meanwhile, are down by about 1%. The economic calendar is light this morning, with S&P flash manufacturing and service sector PMIs the only reports on the calendar.

Asian stocks were mixed overnight. Japan remained closed for a holiday, but Chinese stocks fell while South Korea’s Kospi rallied nearly 1%. Investors are taking a wait-and-see attitude ahead of Tomorrow’s meeting between Trump and Xi. Expectations are low ahead of the meeting, which is likely to be full of platitudes but little substance.

European stocks are generally lower across the board. The STOXX 600 is down 0.25% in early trading, and the weakness is concentrated primarily to Germany, where the DAX is down nearly 1%. Flash PMI readings for the manufacturing sector were mixed, but service sector readings were generally stronger than expected.

The S&P 500 broke a three-day winning streak yesterday, but the decline was modest enough to keep the index at overbought levels after an impressive turnaround where it closed below its 50-day moving average just a few days earlier.

What’s pretty remarkable about the S&P 500 being overbought is that most sectors aren’t. As of yesterday, just two sectors closed in overbought territory, only four were above their 50-day moving average, and five were oversold! Tech has propped the market up this week as the sector closed at ‘extreme’ overbought levels, driven in large part by the monster rally in Meta Platforms (META) on the popularity of its Muse agent but also by strength in semiconductors, which are riding a six-day winning streak where the SOX has rallied 14%.

The worst-performing sector lately has been Financials. It started with warnings last week that Q3 revenue in the sales and trading units of major Wall Street banks was expected to be flat or slightly lower relative to Q2. Then, this week, other firms in the sector have seen sharp declines over fears that AI agents like Muse will eat into their high fees and margins by making it easier for consumers to shop around for lower insurance premiums, higher interest rates on savings, lower credit card interest rates, etc.

Yesterday, the Financials sector fell close to 2% for its worst day since 3/27, putting it in ‘extreme’ oversold territory. As shown in the chart of the sector ETF (XLF), yesterday’s sell-off broke an uptrend that has been in place since that late March low. The sector hit an all-time high on 9/3, just two trading days before the launch of Muse, and now it’s at its lowest level since 7/1. Also notable about yesterday’s decline in XLF was the volume, which surged to the highest level since 3/27. The last time XLF fell this much, got this oversold, and traded this heavily all on the same day was 3/27, when the sector put in a washout low.

Every Wall Street trader has their own “fishing or hunting” story, usually about claiming to have bought this low or that low, and the March lows are no exception. As Bismarck would say, though, these stories usually come after the fact, and we wonder whether many traders around the bar at Harry’s last night were talking about buying the Financials now.

Start a two-week trial to Bespoke Premium to continue reading today’s full Morning Lineup.