As the market awaits the Federal Reserve’s decision this afternoon, the S&P 500 has stabilized after two days of decline. While volumes are lower than yesterday, investors seem to be holding back on their positions, awaiting the outcome of the Fed meeting. The macro environment has shown improvement, with crude oil prices down 3.2% and 10-year bond yields down 4.5 basis points. However, there are signs of a shift in momentum, with winners outperforming losers today, indicating a possible bifurcation in the AI complex.

Data Centers (+2.4%) and AI Semis (+1.9%) have shown strength, while Software At Risk (-1.3%) and AI-Productivity (-1%) are underperforming. This split suggests a divide between profitable and speculative AI companies. META continues to attract attention due to its positive sentiment inflection in preparation for the Muse rollout, with SMH snapping back (+5% on Hynix talks) and AMZN extending its lag due to concerns over rates/oil and Agentic disintermediation.

In terms of franchise flows, overall activity levels are down 4% compared to recent averages, with a -2% improvement in the floor for sales. LOs (-12%) are showing broad-based profit taking, while HFs are more balanced, with a -1% improvement in sales, although the short ratio at 50% may indicate added risk.

Overall, the market seems to be awaiting the outcome of the Fed meeting with caution, as evidenced by the lower volumes and hesitation among investors. However, there are signs of a potential shift in momentum, with profitable AI companies outperforming and META continuing to attract attention.