Yesterday’s market action saw a resurgence of momentum in the tech and AI sectors, with several key indices posting significant gains. The GS Mid Day Wrap reported that the RTY +76bps outperformed the NDX +42bps and SPX +20bps, driven by renewed interest in tech and AI stocks. Our flagship Momentum Pair basket GSPRHIMO (+740bps) snapped back from a 3-day drawdown, fueled by both long positions higher and short positions lower.

The catalyst for the move appears to be the big capital raise this week, which has driven another leg higher in Semis/AI. This has led to a reversal in recent Software strength, with TY Bartlett noting that “the cap raise accelerates software disintermediation.” AI themes are leading the long leg of momentum higher, with AI vs AI at risk GSPUARTI (+650bps) and data centers GSTMTDAT (+470bps) also seeing significant gains. Software, however, is notably lower to start following a 3-day, 15% rip in IGV responsible for much of the momentum pair drawdown. Today, IGV (-310bps) and our AI software infra basket GSTMTAIS (-292bps) saw significant declines.

Healthcare is also seeing heavy macro and micro themes, with HC seemingly getting impacted by source-of-funds dynamics. Several pockets of acute crowding factor pain are in focus today, including out HC HF VIP basket (-6% — a 4.5 stdev move with ABVX -39%, CELC -23%, PRAX -11% all in the basket). TY Chan notes that these factors are causing pain across the sector.

In Fins, we are seeing day 2/3 of exchanges getting mauled as the market digests the potential business model impacts/overhang of perpetual futures. CBOE (-8.4%), CME (-3.25%), ICE (-2.85%), and NDAQ (-5.4%) are all seeing significant declines. This sell-off is also spreading to credit and rates names, with TW (-3%) and MKTX (-4%) in what seems like a broad-based exit from the subsector. Ty Christian Degrasse notes that this could be a sign of caution ahead of earnings season.

Volumes/Liquidity: Market volumes are higher today, ticking +4% vs the 5DMA and +11% vs the 3DMA.