MARKET WRAP

Stocks shrugged off some negative global headlines and took solace in a good PPI print and a resulting decline in treasury yields. Today was much less volatile intraday than the past two trading days although it once again featured an opening gap that immediately reversed. On the day SPX +0.4%, QQQ +0.2% and IWM -0.4%.

Elsewhere, notable moves in both the dollar, with DXY lower by -0.7% and now at multi-year lows, and the US10YY, lower again on this morning’s inflation data, now 4.36%. Oil wasn’t as volatile as yesterday but is holding above $68. The VIX climbed back above 18, reflecting some of those increasing geopolitical concerns.

After hours: ADBE is lower on earnings after hours, but just -1% or so as of now.

• MRKT Call: Guy and Dan talk Inflation, renewed tariff threats, the situation with Iran, rate cut odds, concern about the weakness in the dollar and answer a slew of your questions. 

• RiskReversal Pod: Dan is joined by Rishi Jaluria, MD of Software Equity Research at RBC Capital Markets to chat ORCL’s cloud infrastructure, MSFT’s AI, as well as CRM, HUBS, MDB and more.

MRKT MATRIX: TODAY’S TOP STORIES

• S&P 500 closes higher on Thursday, lifted by Oracle rally and favorable inflation report (CNBC)

• Muted US Producer Prices Add to String of Tame Inflation Report (Bloomberg)

• Trump Says Again He’ll Set Unilateral Tariffs in Two Weeks (Bloomberg)

• Tech Giants’ New AI Ad Tools Threaten Big Agencies (WSJ)

• Air India Boeing 787 Headed to London Crashes After Takeoff (Bloomberg)

• Fed Seeks to Preserve Labor Market Lessons in Rewriting Rates Strategy (Bloomberg)

• Nvidia CEO says this is the decade of robotics and autonomous vehicles (CNBC)

• Apple’s 10 Biggest Challenges, From AI to Tariffs (Bloomberg)

WHAT’S NEXT?

Today was arguably the second straight session of counterintuitive price action. Yesterday’s seemingly bullish setup—featuring a cooler CPI print and encouraging trade talk headlines—ultimately ended with stocks fading into the red as a combination of “sell the news” and rising oil prices saw market participants take profits mid day.

Today, those same geopolitical and trade concerns escalated further, with tougher rhetoric on the tariff front and growing anxiety over the situation in the Middle East. Yet equities reversed a morning gap lower and pushed higher on a growing sense that the Fed may have more room to cut rates later this year. For now, the market appears to be prioritizing the longer term rate path over potential near term global risks.

In the implied volatility view of things right now, the VIX is creeping higher, even on today’s rally. However, near term SPX vol is still quite low, with not much fear priced in over the next week. With yields declining and that factor helping equities hold these levels, oil and the dollar are the wild cards, with DXY now at multi year lows. And although Oil isn’t anywhere near levels of concern historically, its recent sharp move higher is the most noticeable (and only?) reflection of mid-east worries in the market right now.

Tomorrow morning we get the latest Consumer Sentiment data, but the equity market is not pricing in a ton of potential movement as of now. With Friday’s in particular, options positioning can have an outsized effect. So keep an eye on some of the big round numbers in SPX for potential pins. The heaviest open interest for this week are on the 6000 and 6050 lines, of which the market has been bouncing between all week. (the close today may have been reflective of the 6050 line acting as a bit of a gamma magnet as deltas accelerated into 4pm). For tomorrow:

Friday June 13th

SPX Expected Move: 0.6%

TODAY’S EPISODES

Watch MRKT Call’s newest episode: Cooling Inflation Impact On Fed Rate Cut Outlook

• Analysis:  DXY, US10YY, XLE, KRE, BKX, ORCL, BA, GDX, BTC, HUM, 

• SoFi Blog Preview: Core Inflation below expectations for fourth straight month vs Consumer Sentiment and inflation expectations.

• Your Questions Answered:

  • XLE?

  • Think MSFT will buy DOCU?

  • You watching RH earnings?

  • GDX having a day!

  • Thoughts on Humana HUM? It’s been caught in the UNH fallout.

  • Call option skew in PLTR opportunity?

Learn more about our sponsor, SoFi.

Watch RiskReversal Podcast’s newest episode: How AI Is Reshaping the Tech Power Rankings with Rishi Jaluria

Dan Nathan hosts Rishi Jaluria, Managing Director of Software Equity Research at RBC Capital Markets, on the Risk Reversal Podcast to discuss the latest Q1 earnings, AI advancements, and broader market themes. They delve into Microsoft's innovative AI strategies and their significant investments in OpenAI. The conversation highlights the importance of long-term perspectives in evaluating AI monetization and market impacts.

Rishi shares insights on the enthusiasm surrounding Oracle's cloud infrastructure (OCI) and its role in the AI landscape, as well as analysis on companies like Salesforce, HubSpot, and MongoDB in the context of their AI and growth strategies. The podcast also explores macroeconomic factors, market sentiments, and the potential implications of geopolitical developments on software businesses. —

Learn more about our sponsor Betterment and RBC Capital Markets.

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