June 26th Pre-Market Brief

Good Morning

Tech's been getting sold all week and chips are out front again today. Everybody's blaming the OpenAI IPO. This market spent the whole year betting on rate cuts, and now it's bracing for a hike.

Let’s dig in…

Today's Big Picture

The AI Selloff Isn't About Demand
OpenAI said it’s delaying its IPO as people souring on AI. The delay isn't really about cold feet on the AI buildout. Altman is pushing for a $1 trillion valuation, and advisers gave executives a choice: wait until 2027 to let the market stabilize and hit that number, or accept a lower valuation for a faster listing into late 2026. Altman called any cut to the trillion-dollar figure a non-starter.

The Small-Cap Index Shuffle
After the close, the Russell indexes get their twice-a-year reshuffle, and 43 of the best names are graduating out of the small-cap Russell 2000 up to the large-cap 1000. That's a problem hiding in plain sight. The Russell 2000 is up 21% this year, and a lot of that came from the very stocks leaving tonight. The small-cap benchmark you check next week is going to look and behave differently than the one that's been carrying the gains.

The Quiet Flip From Cuts To Hikes
Back in January everyone had the Fed penciled in to cut rates this year. Now a hike is the live debate, after its preferred inflation gauge hit a three-year high for May. Almost nobody is saying it out loud, but that reversal is the real weight on tech, since higher rates make expensive growth stocks harder to own. Watch gold too, which is red a fourth straight week, the same story showing up somewhere most people aren't looking.

Market Overview

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Stock Spotlight (pre-market)

Micron $MU ( ▲ 15.74% )  

Giving back a chunk of Thursday's pop even after a blowout quarter and a shortage locked in through multi year deals. The forced sellers are the fast money traders who chased it up, now bailing as the whole chip group rolls over.

Apple $AAPL ( ▼ 6.12% )  

Bouncing a little after its worst day in over a year, when it raised Mac and iPad prices to cover rising memory costs yesterday. Now the buyers are the ones on the spot, deciding whether they pay up or wait it out.

ON Semiconductor $ON ( ▲ 2.59% )  

Is getting hit premarket after agreeing to buy Synaptics in a roughly $7 billion all stock deal, its largest ever. ON holders are forced to digest the dilution while Synaptics shareholders climb on the premium.

Nvidia $NVDA ( ▼ 1.64% )  

Broke below the $200 floor it had been holding and is headed for its worst week since last spring.

Strategy $MSTR ( ▼ 9.35% )  

Fell to its lowest in over two years as bitcoin slid under $60,000. The company is the one boxed in, owing more in preferred dividends every quarter and edging toward having to sell coins to cover them.

Wendy's $WEN ( ▼ 6.74% )  

Fading after the Reddit crowd turned it into this week's meme trade. The squeezed shorts have mostly covered, so the fuel is gone, and now Nelson Peltz is the one watching the buyout he was weighing get pricier by the day.

What to Watch

IPO’s

MarketBeat did an excellent job on this free IPO guide on IPO’s happening this year.

The SpaceX Buying (After The Close)
When the Russell indexes reshuffle after today's close, passive funds have to buy roughly three billion dollars of SpaceX whether they want it or not. Forced buying into the closing auction can push a stock up fast. Tesla did the same thing on its S&P entry in 2020 and ripped, so I'm watching that last hour.

Russia's Diesel Ban
Russia is reportedly weighing a months-long ban on diesel exports after drone strikes hit its refineries. Everyone's fixed on crude falling, but diesel trades on its own, and a major exporter going quiet would tighten that market in a hurry.

- John

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