The themes and narratives in the US equity market continue to unfold, with investors chasing the AI trade broadly higher. Tech is outperforming alongside Metals & Mining, while Large Cap Banks and Energy are among the worst performers. Despite a quieter session today, there is still a fair amount of single stock dispersion, with investors cleaning up books and targeting non-core names. The Fed minutes have not changed anything, but given the Fed’s data dependency, this could become interesting over the next couple of weeks.

High Touch flows have shifted, with both Long Onlys (45/55 – buy/sell) and Hedge Funds (38/55/7 – buy/sell/short sell) net for sale. There is subdued short activity, opposite of what was seen on Tuesday. The desk remains a better seller in Tech into the bounce, as well as Financials and Industrials. However, it is also a better buyer in Telecos.

Looking below the surface, there is incredible action in AMD, leading the Semis higher. Data centers, Hardware, and secular growth winners are all higher, while Reits and Financials are not acting great and seeing supply in Money Centers, Regionals, and Insurance. Traditional Media is deep in the red, with Warner Bros Discovery (deal uncertainty) and Live Nation Entertainment (convert) contributing. Healthcare is in the middle of the pack, with index level performance masking significant dispersion bracketed by a cover bid in SmidBio and Tools versus MedTech/Pharma/Facilities on the downside.

Overall, the market continues to be driven by themes and narratives, with investors chasing the AI trade and cleaning up books. While there is still some single stock dispersion, the overall trend remains upward. However, given the Fed’s data dependency and the ongoing de-grossing, it will be important to monitor the market closely over the next couple of weeks.