Markets have been experiencing another day of red, with the Goldman midday wrap indicating that software and AI-related stocks are seeing a reversal from yesterday’s gains. The GSTMTSFT index is down by 2.6%, while the GSPUAISS index has lost 2.9% due to renewed fears of AI competition. Notably, rate-sensitive financials, non-profitable tech, and most short stocks are underperforming today, with the GSXURATE Index declining by 5.2%, the GSXUNPTC Index falling by 4.5%, and the GSCBMSAL Index losing 3.8%.

The cyclical vs defensive pair is experiencing its worst day since Liberation Day, with the GSPUCYDE index down by 3.7%. It’s important to keep an eye on Monday’s ISM print, which could be used as a metric to determine the next iteration of the cyclicals trade.

In terms of flows, we are currently at a 6 out of 10 in terms of overall activity levels, with LOs (large orders) skewed 3.3% better for sale in industrials, consumer discretionary, and information technology. HFs (hedge funds) are largely balanced, with supply in real estate and communication services, and demand in macro products and materials.