June 26thMarket Overview

Happy Friday

Brutal week for tech. The Nasdaq just had its worst week in over a year, chips got hit the hardest, and today everyone's pointing fingers at the OpenAI IPO news.

I personally think this is a healthy reset after a hot year, not the start of something long term and ugly. The market is re-calibrating for rate hikes after expecting cuts almost all year.

Let’s dig in...

Today's Big Picture

AI Selloff Is About Price, Not Demand
Tech sold off worldwide on word that OpenAI may push its IPO to 2027. Look past the headline. Altman wants a one trillion dollar valuation, and his bankers said wait for calmer markets or take less now. He won't take less. So this is a fight over price, not a verdict on AI demand.

Rate Cuts Are Off The Table
In January the market had the Fed cutting this year. Now the debate is whether it hikes. Kashkari, who votes on rates and leans dovish, flipped his own call today from one cut to one hike after inflation hit a three year high. That quiet reversal, not any IPO headline, is the real weight on pricey tech.

Oil's Round Trip Is Complete
US crude closed below seventy dollars for the first time since the Iran war began in late February. A full round trip, even after Trump said Iran broke the ceasefire by hitting a cargo ship in Hormuz. Tankers keep crossing and US drillers are adding rigs, so the supply scare has faded.

Market Overview

Index Performance

Stock Spotlight

Micron $MU ( ▼ 5.58% )  
gave back Thursday's pop even after a blowout quarter and a shortage locked in through multi-year deals. The fast money that chased it up is taking profits as the whole chip group rolls over.

Apple $AAPL ( ▲ 2.14% )  
steadied after its worst day in over a year, when it raised Mac and iPad prices to cover higher memory costs. Now buyers have to decide whether to pay up or wait the shortage out.

ON Semiconductor $ON ( ▼ 23.19% )  
sank after agreeing to buy Synaptics in a roughly seven billion dollar all-stock deal, its biggest ever. Shareholders are swallowing the dilution today and sorting out the robotics push later.

Nvidia $NVDA ( ▼ 0.74% )  
slipped below the two hundred dollar line it had been holding, on track for its worst week since last spring.

Big Name Updates

Microsoft $MSFT ( ▲ 5.67% )  
bounced off a one year low after months of pressure over heavy AI spending. Michael Burry disclosed a long bet through call options running out to 2028.

Eli Lilly $LLY ( ▲ 7.06% )  
climbed after European regulators backed its drug Jaypirca for a form of leukemia. Healthcare is where the money rotating out of tech is landing.

Moderna $MRNA ( ▲ 10.19% )  
gained after laying out a push into autoimmune treatments and a wider pipeline beyond Covid vaccines.

Netflix $NFLX ( ▲ 4.02% )  
rose on a deal with Omnicom to sell targeted ads using its viewing data, a welcome breather after a rough month.

Other Notable Company News

Boeing $BA ( ▼ 0.23% )  
China Southern agreed to buy jets worth at least 3.62 billion dollars.

Volkswagen $VWAGY ( ▼ 2.86% )  
is weighing up to 100,000 job cuts and the closure of four German plants.

Nike $NKE ( ▼ 0.44% )  
KeyBanc cut it to neutral, citing a slower turnaround and China and Europe headwinds.

Rocket Lab $RKLB ( ▲ 3.99% )  
won three NASA launches scheduled for 2027.

Unilever $UL ( ▲ 0.06% )  
is exploring a bid for supplement maker Thorne in a deal that could reach four billion dollars.

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Sector Watch

Bond Market

Treasury yields drifted lower even as hike talk grew louder. Falling oil did the heavy lifting, pulling the longer end down and outweighing the Fed noise. The two year, which tracks rate expectations most closely, slipped a touch.

Policy Watch

Fed
Fed chair Kevin Warsh speaks Wednesday in Portugal. With inflation running warm and a hike back on the table, every line gets read twice.

Trade
Courts ruled the government collected some tariffs illegally, and now shippers are refunding that money to customers:

• FedEx $FDX is holding 800 million dollars for customers, with payouts starting in August.

• UPS $UPS expects up to 5 billion dollars back and plans to pass it straight to customers.

International
Iran put the Strait of Hormuz back in play. Drones hit a Singapore-flagged cargo ship, and Trump called it a clear break of the ceasefire. No casualties, but Iran now says every vessel must check in with Tehran before crossing.

The point isn't one ship. It's that Iran just showed it can choke the world's busiest oil route whenever talks sour. Some tankers turned around mid-crossing. Oil fell anyway, so the market is betting this stays a standoff, not a shutdown.

What to Watch

The AI company quietly automating every Walmart distribution center. 
23 billion in orders on the book.

It's just one of seven names in this free MarketBeat report.

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

The June Jobs Report (Thursday)
With the Fed debate flipping toward a hike, Thursday's payrolls number carries extra weight. It lands a day before markets close for the Fourth of July, so expect thin, jumpy trading around it.

Thanks for reading - you are now the more informed 🙂

- John

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