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Last Updated: 10-Jun-26 09:08 ET | Archive
Skittish market pondering geopolitical, CPI, and new supply headlines
Briefing.com Summary:
*Core CPI was better than feared in May, but that doesn't mean it was good.
*President Trump has threatened to renew strikes on Iran because it is taking too long to negotiate a deal.
*Supply concerns persist and are acting as an overhang for the tech sector.
The equity futures market is weak this morning. The S&P 500 futures are down 39 points and are trading 0.6% below fair value, the Nasdaq 100 futures are down 253 points and are trading 0.9% below fair value, and the Dow Jones Industrial Average futures are down 237 points and are trading 0.5% below fair value.
The go-to excuse for the selling interest is renewed angst about the U.S.-Iran conflict. Last night, the U.S. launched a strike on Iran for its downing of an Apache helicopter; Iran retaliated with missile launches toward U.S. bases in Kuwait, Jordan, and Bahrain; and now President Trump is saying Iran has taken too long to negotiate a deal and will have to "pay the price," noting that he is close to ordering new strikes on Iran's power plants and bridges.
All this just a day after the president said a new deal with Iran could be reached in two or three days. Sigh.
WTI crude futures are up 1.6% to $89.58/bbl, which, frankly, is not a lot given the tenor of the latest headlines. This suggests to us that the market thinks the headline bark is likely worse than any possible bite. It also suggests that the concern about Iran is being oversold as the main excuse for the market's weakness.
The principal driver for the market's weakness is the same as yesterday. There is follow-through selling of the semiconductor stocks and technology stocks that is running parallel with concerns about the increased supply of new equity issuance through IPOs and secondary offerings to raise cash to fund AI plans.
Super Micro Computer (SMCI) is down 11.8% after proposing $7 billion of equity and equity-linked financing transactions to fund its AI orders. It is a signpost today for the supply concerns that are building amidst an IPO calendar that is heating up and which will be white-hot on Friday with SpaceX (SPCX) going public.
Sticking with our temperature theme, the Consumer Price Index for May was on the warm side. Total CPI increased 0.5% month-over-month in May (Briefing.com consensus: 0.5%), leaving it up 4.2% year-over-year versus 3.8% in April. Core CPI, which excludes food and energy, increased 0.2% month-over-month (Briefing.com consensus: 0.3%) and was up 2.9% year-over-year versus 2.8% in April. The energy index accounted for over 60% of the increase in the monthly all items index.
The key takeaway from the report is that core CPI was not as bad as feared, but that doesn't mean it was good. Core CPI is still running well above the Fed's 2.0% inflation target, so this report was by no means a game-changer in terms of the prevailing view that the Fed won't be cutting rates anytime soon.
The latter point notwithstanding, there was some notable improvement in the equity futures market following the release of the CPI data, as traders focused on the better-than-feared core number. The Nasdaq 100 futures had been down 345 points just before the release and cut that loss by over 200 points shortly after the report. There has been some renewed selling in the interim, but even so, the position is much improved from earlier when the Nasdaq 100 futures were down close to 500 points.
It is a skittish market right now, as participants turn over the prospect of increased military action in the Middle East along with increased selling interest in the tech stocks and increased inflation that will keep the Fed on hold.
Price action is the key driver, and lately, it has been hitting more bumps in the road than the market has grown accustomed to after gleefully going along for quite a joy ride off the March lows.
