Inflation fears and rate repricing hit US indices
Key Questions
What triggered the worst sell-off in US indices since October?
A massive jobs beat on June 5 crushed hopes for near-term rate cuts, leading to sharp declines across major indices. Markets later rebounded but faced renewed AI-related selling pressure.
How did markets perform after the initial sell-off?
US indices rebounded on June 8 before AI selling resumed on June 9-10. A surge followed on June 11-12 driven by Iran truce speculation, with the S&P 500 rising 1.4% on June 11.
What drove the rally on June 15 and 16?
The US-Iran interim peace deal and falling oil prices fueled gains, with the S&P 500 up 1.7% and Nasdaq up 3.1% on June 15. Financials led the global rally on June 16 as crude dropped about 6%.
What is the current outlook for Fed rate cuts?
Rate cut odds remain low due to elevated bond yields and persistent inflation concerns. The upcoming FOMC meeting and CPI data are viewed as key events.
Who is the new Fed Chair mentioned in the highlight?
Kevin Warsh is referenced as the new Fed Chair ahead of the FOMC meeting this week.
What role did the rotation trade play recently?
A rotation out of mega-cap tech stocks into other sectors has persisted amid higher yields and shifting market sentiment.
How did major indices close on June 12?
Major indices gained over 1.7% on June 12 following the Iran truce announcement and related market optimism.
What upcoming data remains critical for markets?
The next CPI release is still considered a key driver for inflation expectations and Fed policy outlook.
Massive jobs beat on June 5 crushed rate cut hopes, triggering worst sell-off since October. Markets rebounded June 8, but AI selling resumed June 9-10. However, on June 11-12, markets surged on Iran truce speculation and announcement, with S&P 500 up 1.4% on June 11 and major indices gaining over 1.7% on June 12. The rally continued on June 15 with S&P +1.7%, Nasdaq +3.1% driven by the US-Iran interim peace deal and falling oil. On June 16, the global rally extended further, with financials leading and crude dropping ~6%. The rotation trade out of mega-cap tech persists. Bond yields remain elevated, Fed rate cut odds low. FOMC meeting this week with new Chair Kevin Warsh. Upcoming CPI data still key.