A bit of a mix-up before the open

Briefing.com Summary:

*Mega-cap stocks and semiconductor stocks are exhibiting some relative strength ahead of the open.

*Long-term Treasury yields remain elevated, even in the wake of last week’s improved inflation data.

*China posted a batch of weaker-than-expected economic data for July.

There is a mixed tone in the equity futures market to begin the week. Currently, the S&P 500 futures are down one point and are trading fractionally below fair value, the Nasdaq 100 futures are up 62 points and are trading 0.3% above fair value, and the Dow Jones Industrial Average futures are down 182 points and are trading 0.4% below fair value.

This imbalance, so to speak, features some pre-market outperformance by the mega-cap stocks and the semiconductor stocks and a “blah” performance from just about everything else.

This is not an unfamiliar trade. The month of August has featured the outperformance of the mega-cap stocks and the semiconductor stocks, so this may just be a trend-following trade on an otherwise slow morning for corporate news.

To be fair, the rest of the market has done quite well in August, too. The Russell 2000 is up 4.7%, the S&P MidCap 400 is up 4.5%, and the equal-weighted S&P 500 is up 3.6%.

The question on the mind of most market participants is, can these good returns persist? The direction of Treasury yields and oil prices will likely dictate that answer. If both keep pressing higher, stocks will have difficulty following suit. The 10-yr note yield is up one basis point to 4.71%, while WTI crude futures are up 0.3% to $82.61/bbl.

There is a bit of irony in the fact that the U.S.-Iran “ceasefire agreement” expires today. The original memorandum of understanding didn’t last long. Hence, here we are today still talking about the Strait of Hormuz not being fully reopened and the U.S. continuing its blockade of Iranian ports and imposing harsh economic sanctions.

Still, the market has been able to maintain some hope in the notion that diplomacy will prevail and that oil prices won’t be a trigger for a global recession.

There is certainly no recession in the U.S. Second quarter earnings are up 51.0% year-over-year, and the Atlanta Fed GDPNow model estimate is projecting 4.3% real GDP growth for the third quarter. 

There was a good bit of Q3 news this morning, with the Empire State Manufacturing Index for August checking in at 20.6 (Briefing.com consensus: 11.0) versus 15.6 in July. The dividing line between contraction and expansion for this series is 0.0, so the August reading suggests manufacturing activity expanded at an accelerated pace in August.

Business activity in China, meanwhile, was slower than expected in July. Some key data released over the weekend included the following: July Industrial Production 4.5% yr/yr (expected 5.0%; last 5.3%), July Fixed Asset Investment -6.7% yr/yr (expected -6.2%; last -5.7%), July Retail Sales 0.6% yr/yr (expected 1.5%; last 1.0%), and July Unemployment Rate 5.2% (expected 5.1%; last 5.0%).

The Shanghai Composite, for its part, gained 1.4% on Monday. The U.S. market will have some work to do to match that performance today, but to its credit, it has put in a strong performance already this month.

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Originally Posted 8/17/2026 – A bit of a mix-up before the open