- Nasdaq 100 futures dropped 1.6% and S&P 500 contracts fell 1.1% as tech stocks extended their selloff into a second day, with AI infrastructure names and miners among the worst performers in premarket trading.
- Oil swung to gains after Trump warned Iran it “will have to pay the price” for prolonged negotiations and said he was close to ordering new strikes; Brent advanced 1.7% to $93/barrel, with the 10-year Treasury yield rising 3 bps to 4.54%.
- May CPI is expected to show inflation accelerating to 4.2% annual — the highest since April 2023 — from 3.8% in April; JPMorgan’s desk warned an upside surprise above 0.35% monthly core could push the S&P 500 down as much as 3%.
- SpaceX’s ~$75 billion IPO is set to price Thursday and trade Friday, with institutional orders multiple times oversubscribed — while the BOJ governor was hospitalized and SoftBank’s $6 billion margin loan backed by its OpenAI stake hit a snag.
What Happened?
U.S. equity futures slid Wednesday as a fresh round of US-Iran exchanges overnight strained the fragile ceasefire and sent oil higher, with Brent rising to $93/barrel after Trump threatened new strikes on Fox News. The Nasdaq 100 was set for a second consecutive day of losses, led down by AI infrastructure and chip names still unwinding from the previous week’s record run. Markets are simultaneously navigating the SpaceX IPO pricing Thursday — a $75 billion deal that has attracted several times oversubscribed institutional orders — and a May CPI report expected to show inflation at 4.2%, the highest in over three years. Treasury yields rose in anticipation, with the 10-year at 4.54%. TSMC reported a 30% rise in monthly sales, providing some counterweight. The BOJ governor was hospitalized and will miss next week’s policy meeting. SoftBank’s talks to raise $6 billion via a margin loan backed by its OpenAI stake have stalled.
Why It Matters?
Markets are caught between two competing narratives: 1999-style AI exuberance and 2000-style tech crash fears, as Deutsche Bank’s Jim Reid put it. The CPI print is the most immediate binary risk — economists project 4.2% annual inflation driven partly by oil-price pressures from the Iran war. Options are pricing a 1%+ S&P 500 move on the report. On top of that, the SpaceX IPO represents one of the largest single capital events in stock market history and could temporarily soak up significant investor cash. The rate backdrop has shifted sharply: markets have moved from pricing Fed cuts to pricing potential hikes, a reversal that has already hit crypto and high-multiple tech names hard.
What’s Next?
Wednesday’s CPI print and a $39 billion 10-year Treasury auction are the immediate catalysts. SpaceX prices Thursday and begins trading Friday — a landmark event for both the IPO market and retail investing. The Iran situation remains the wildcard: Trump’s “pay the price” language introduces real uncertainty about whether the ceasefire will hold through the week. Any hot CPI reading combined with a breakdown in Iran talks could produce a sharp risk-off move across equities, rates, and commodities simultaneously.
Source: Bloomberg
