Markets are off to a strong start today, with the S&P 500 tracking for its best quarter since Q2 2020. The tech sector and semiconductor stocks continue to lead the way, with the Nasdaq Composite up over 165 basis points and the S&P 500 up over 75 basis points. Meanwhile, the Russell 1000 Growth Index is outperforming, up over 48 basis points.

Our high beta momentum basket, GSPRHIMO, is up over 310 basis points today and has reversed Friday’s drawdown, which was the largest single-day momentum pullback this month. Both legs of momentum are working today, with the long leg heavily skewed towards the AI trade.

Familiar AI themes are leading once again, with stocks like GSPUARTI, AI Semis GSCBSMHX, memory GSTMTMEM, data centers GSTMTDAT, and optical GSXUOPTI all performing well. It’s worth noting that our hyperscalers basket continues to underperform in this tape, with GSXUHYPR down 10 basis points.

According to our proprietary PB data, systematic LS managers are experiencing their worst 5-day performance streak since December 2023, down 3.1%. This could be providing some relief in today’s “right way” price action.

Volume levels are noticeably lower ahead of the holiday weekend, with overall market volumes down 20% versus the 20-day moving average. The top of book currently sits at $6.8 million, which is 7% higher than the 20-day moving average.

Our flows indicate that activity levels are at a 4 out of 10 on the desk, and we are currently skewed 11% better to buy across the floor. LOs (long only) are 6% better to buy, with demand in consumer discretionary, financials, and macro products versus light supply in information technology and energy. HFs (hedge funds) are currently 7% better to buy, with demand in information technology and industrial versus supply in healthcare, consumer discretionary, and macro products.

Overall, today’s price action suggests that investors are continuing to favor tech and semi stocks, despite the ongoing volatility in these sectors.