Author: Trend Research

On Tuesday, Wall Street staged a thrilling drama of "first kill and then save."

The market progressed calmly in the morning, with the Nasdaq rising nearly 0.7%, as chip stocks continued their rebound from Monday. In the afternoon, Trump posted on Truth Social, stating that Iran shot down a U.S. Army Apache helicopter over the Strait of Hormuz, and while both pilots were safely rescued, the U.S. "must respond to this attack."

The Nasdaq instantly plummeted, dropping as much as -3.5% at one point.

In the following two hours, the market slowly climbed back following Trump’s statements about "negotiations are still progressing" and "an agreement might be reached in two or three days," ultimately narrowing the losses. The Nasdaq closed down 0.97% at 25678.82 points, while the Nasdaq 100 fell 1.12%. The S&P 500 dropped 0.26% to 7386.65 points. The Dow Jones, supported by non-tech components, closed up 0.17% (+86 points) at 50872.11 points.

From -3.5% to -0.97%, the Nasdaq recovered over 70% of its intraday losses in the two hours before closing. This recovery hints at two signals: first, bears are hesitant to heavily short before the CPI; second, there remains strong belief in the market that "the Iran issue will ultimately be resolved," it’s just a matter of time.

Helicopter Incident: First Strike on U.S. Assets

This is the first loss of a U.S. Apache helicopter since the outbreak of the U.S.-Iran conflict at the end of February. Although there were no casualties, the notion of "striking U.S. assets" has crossed a psychological red line. Trump used the wording "must respond," one of his strongest statements regarding Iran.

CNN reported that U.S. military drones rescued the two pilots. Iranian Foreign Minister Araghchi later responded on X, stating, "Foreign military forces close to our territory always face the risk of their own human errors, accidental incidents, or getting caught in crossfire." The implied message is clear: admitting to an active shooting down was avoided, but it wasn't denied either.

Vice President Pence stated in a CBS interview that the agreement is "very close" but "there's still work to be done." After attending the NBA Finals (Spurs vs. Knicks), Trump told reporters that the final agreement could be reached "in two or three days," and the Strait of Hormuz would "immediately" reopen after the agreement is signed. He also emphasized that the U.S. blockade of Iranian ports would not be lifted until an agreement is reached.

The market was able to digest this bombshell during the trading day because from March to June, investors had been educated repeatedly on the Middle East situation for 100 days: after every escalation, there was a de-escalation; behind every missile launch, there was a tweet stating "negotiations are still ongoing." This is a "war fatigue" — not fatigue from the war itself, but fatigue from the market being repeatedly hijacked by war.

Sector Divergence: Tech Takes Another Hit, Dow Holds Steady

Among the 11 S&P sectors, only Technology (-2%) and Energy fell. The other 9 sectors all closed up. The non-tech components of the Dow held the situation steady.

This has been a continuing pattern over the past week: Dow steady, Nasdaq collapsing. From June 4 (Thursday) to June 9 (Tuesday), the Nasdaq dropped more than 5%, while the Dow only fell less than 1.5%. The flow of funds from AI chips to healthcare, financials, and consumer defensive sectors shows no signs of slowing down.

NVIDIA dipped 0.22%, and Micron dropped 1.41%. Following last Friday's massive chip sell-off, chip stocks did not experience panic-induced secondary sell-offs nor convincing V-shaped rebounds, but are rather consolidating at lower levels. Institutions are waiting for one thing: tomorrow's CPI.

Oil: Helicopter Shot Down, Oil Prices Dropped Instead

The most counterintuitive market movement on Tuesday occurred in the oil market.

With a U.S. military helicopter shot down, oil prices should logically surge. However, WTI crude plummeted 3.93% to $87.73 per barrel, while Brent fell 1.3% to $93.02 per barrel. The reasons were three bearish factors acting simultaneously: Trump's and Pence's statements about how "the agreement is in sight" pressured war premiums; OPEC+ approved an increase of production by 188,000 barrels per day in July; and after last week’s unexpectedly strong non-farm payrolls, the market began to worry that Fed rate hikes would suppress demand.

WTI breaking below $90 represents a psychological threshold. The last time it was at this level was after the first ceasefire in mid-April. If the CPI data shows inflation cooling due to falling oil prices, this would be the best excuse for the Fed to pause rate hikes.

Gold continued to be under pressure, maintaining a two-month low near $4,300. A stronger dollar and rising rate expectations are dual pressures on the safe haven buying of precious metals. Silver slightly rose 0.81% to $68.90, supported by industrial demand.

Bitcoin dropped to around $62,500, down 27% year-to-date in 2026, having halved from its historical high. Spot BTC ETFs have seen net outflows for four consecutive weeks, totaling $5.4 billion in withdrawals during the past month. Strategy (formerly MicroStrategy) plummeted 24.29% last week, marking its worst weekly performance since the FTX collapse in November 2022, with even the most steadfast bullish institutions in the crypto space suffering losses.

Outlook: CPI Day, the Most Important 8:30 in June

Tomorrow (Wednesday) at 8:30 AM ET, the May CPI data will be released.

This data point's significance is no longer just that of a monthly economic indicator. It is the key evidence the market uses to answer all of the following questions:

Does last week's non-farm payroll surplus of 172,000 reflect overheating in the job market? How deeply has the rise in oil prices due to the Middle East conflict penetrated core inflation? In the Fed's meeting on June 16-17, will they maintain a wait-and-see approach or clearly shift to a hawkish stance?

The market currently bets on a 70% probability of a rate hike in December, and if CPI exceeds expectations, this probability could surge to 90%, putting further selling pressure on the Nasdaq. If CPI unexpectedly cools, especially if core CPI declines, it will become the strongest catalyst for chip stocks to stop falling, and short covering may trigger a wave of vigorous technical rebounds.

After market close on Wednesday, Oracle's earnings report will be released. As a key player in AI cloud infrastructure, it holds over $500 billion in remaining performance obligations (RPO), and the market needs to see these contracts converting into actual revenue. Thursday will be a triple hit with the PPI, ECB rate decision, and OPEC monthly report.

Bigger IPO events are also approaching. SpaceX is expected to price on June 11 and list on NASDAQ on June 12 (Ticker: SPCX), with a valuation range of $1.75 trillion to $2 trillion. The World Cup will commence in the U.S. on June 11.

But all of this comes after 8:30 AM tomorrow.

In the past six trading days, the Nasdaq has fallen from its historical high of 27094 points to 25679 points, a drop of 5.2%. The VIX soared from 16 to 19. The chip sector has evaporated over $1 trillion. The ceasefire in the Middle East is virtually non-existent. Bitcoin has halved. This is a market under comprehensive pressure.

In this context, if the CPI delivers a reading below 4%, it will be like a shot of adrenaline; if it exceeds 4.5%, then last week's plunge may just be an appetizer.

At least for today, one thing is already clear: oil prices below $90 indicate that the market is pricing in for peace. But whether peace can truly come depends on whether that so-called agreement with Iran, which is supposedly "to be reached in two or three days," is yet another broken promise or if it will indeed come to fruition.

It's been a hundred days. The market is no longer willing to guess. It just wants to see results.