The equities market saw red on Wednesday, despite recovering from session lows, as investors reacted to a series of industry developments and geopolitical tensions. The notable rotation out of AI infrastructure stocks followed Anthropic CEO Dario Amodei’s comments over the weekend, which called for a slower pace of frontier evolution. This led to a 2.5 standard deviation move in the software sector, with the GSPUSOSE index closing up by 12.56%.

Meanwhile, there were significant moves in other areas of the market. The AI vs AI at Risk (GSPUARTI) index saw a 9.96% decline, its worst day since Deepseek’s (-2.2 standard deviation move) and a spread of 3-month (GSPHRMO3) versus 12-month (GSPRHIMO) government bonds. The momo pairs had their widest side since the 2020 election, with Brent finishing green on the day for the ninth time in the past ten sessions.

In geopolitical news, Russia and Ukraine agreed not to strike each other’s energy targets, but Brent still finished the day higher (9th time in the past 10 sessions). Additionally, there were headlines of GCC-Iran talks being postponed.

Ten-year yields briefly touched 5% for the first time since October 2023, although rates came in towards the end of the session as the market looked towards the FOMC meeting on Wednesday (currently pricing in around 91% chance of a hike).

Overall, the market remains volatile as investors continue to navigate a complex landscape of industry developments and geopolitical tensions. With the FOMC meeting looming, investors will be closely watching for any signs of monetary policy shifts and how they may impact the broader market.