MARKET WRAP

Stocks closed lower today, erasing most of yesterday’s gains as oil prices surged once again, now near highs of the past year. Should the Iran conflict persist and prices continue higher it could begin to complicate the inflation picture, but not many signs of that yet. On the day SPX -0.8%, QQQ -1%, and IWM -1%. Equities have held in there fairly well given the geopolitical uncertainty.

Elsewhere, the US10YY was lower to 4.39% into tomorrow’s Fed Rate Decision. As mentioned, oil was +4.5%, now $75. The dollar had a strong move higher late in the day, with DXY closing at $98.86. Gold was slightly lower. The VIX is back above 21. Implied volatility continues to creep higher, outpacing the actual volatility of the SPX, which continues to hug the 6000 level into Friday’s large expiry.

After hours: Fairly quiet after hours with SPY and QQQ a tick lower from the close.

• MRKT Call: Guy and Dan with the latest on the Iran situation and the effects on equities, the dollar, oil and more. Plus, a check-in on semiconductors, Pharma, advertisers and more.

• RiskReversal Pod: Dan Ives joins to discuss his new Wedbush AI Revolution ETF, which includes 30 companies crucial to the AI sector, including Nvidia, Microsoft, and Tesla.

MRKT MATRIX: TODAY’S TOP STORIES

• Dow drops 300 points as Iran-Israel conflict worsens (CNBC)

• Trump Plays Down Iran-Israel Truce as He Leaves G-7 Early (Bloomberg)

• Trump Officials Weighed Broader China Tech Restrictions Ahead of Trade Talks (WSJ)

• OpenAI and Microsoft Tensions Are Reaching a Boiling Point (WSJ)

• Trump’s Latest Attack on the Fed Zooms In on Surging Debt Costs (Bloomberg)

• Senate Bill Expands Business Tax Breaks, Delays Deal on SALT (Bloomberg)

• JPMorgan Hikes Sapphire Reserve Fee to $795 in Card Overhaul (Bloomberg)

• US Retail Sales Drop for a Second Month, Dragged Down by Cars (Bloomberg)

• Trump’s Smartphone Can’t Be Made in America for $499 by August (WSJ)

WHAT’S NEXT?

Despite today’s decline, the SPX remains stuck within the well-worn 6000-level consolidation range that has defined the past few weeks. There’s added significance the next few days due to the gravitational pull of this Friday’s options expiry—which is very large, and with a market holiday on Thursday, is already exerting an outsized influence on price action.

As noted in this space, the majority of that open interest resides at the 6000 level and just above. Should the market break down a bit from here it could release from that gamma effect, with traders looking to add protection in the 5950 to 5900 range, which could accelerate selling. Otherwise, any moves within 50 points in and around 6000 are likely to remain muted into Friday, despite rising IV. Should we move below 5950 tomorrow keep an eye on the VIX for signs of that potential acceleration.

Some focus now shifts to tomorrow’s FOMC rate decision. While the Fed is expected to keep rates unchanged, there’s always the potential volatility around the statement itself and the subsequent press conference. The timing and scale of future rate cuts are even less clear this week in light of rising geopolitical uncertainty and cross-asset volatility, especially oil.

The expected move of 0.9% for tomorrow is much more than the 0.6% expected moves we’ve seen other days this week. TLT isn’t expecting fireworks. But do note Oil is now pricing 4% daily moves and should that continue higher it will likely start affecting other assets more severely.

• Wednesday, June 18th

  • 8:30am - Housing Starts

  • 2pm - FOMC Rate Decision

  • 2:30pm - Powell Presser

• Expected Moves for Tomorrow:

  • SPX: 0.9%

  • TLT: 0.7%

  • USO: 4%

TODAY’S EPISODES

Watch MRKT Call’s newest episode: Israel-Iran Conflict: What Investors Need To Know

Analysis - Crude, DXY, UUP, SPX, SOXX, QCOM, AMD, INTC, WDC, DELL, ADBE, NVO, NUE, CLF, BTU, VIX, US10YY

• Your Questions Answered:

  • What do you boys make of the absolute carnage in the solar sector? Buying opportunity or time to crawl under the table and assume the fetal position?

  • is the downtrend in the dollar the reason why so many tech companies are outperforming recently?

  • What do you make of steel and NUE and CLF?

Learn more about our sponsor, FactSet.

Watch RiskReversal Podcast’s newest episode: Dan Ives: This Is Apple's Make or Break AI Moment

Today we welcome back ⁠Dan Ives⁠, the Global Head of Technology Research at ⁠Wedbush Securities⁠, for his third appearance in three months. Dan discusses his recent visits to the New York Stock Exchange and major calls on tech stocks, especially his bullish stance on Tesla. He introduces his new ETF, the Dan Ives Wedbush AI Revolution ETF, which includes a dynamic list of 30 companies crucial to the AI sector, like Nvidia, Microsoft, and Tesla. Despite skepticism around high valuations and market digestion, Dan remains optimistic about the transformative potential of AI. The podcast also covers the performance and future prospects of major tech players like Oracle, IBM, Meta, and Apple, as well as the potential for AI-driven growth in the tech sector. Dan highlights the importance of staying adaptable and responsive in the ever-evolving market landscape, offering insights into how his ETF reflects this approach.

Learn more about our sponsor Current and RBC Capital Markets.

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