Markets:
- Gold down $172 to $7280
- WTI crude oil up $2.25 to $90.46
- S&P 500 down 1.5%
- Nasdaq Comp down 1.8%
- US 10-year yields up 1.4 bps to 4.54%
- EUR leads, AUD lags
Buy-the-dips has suddenly turned to sell-the-rips. There was something of a see-saw in the early going as the S&P 500 erased a 45 point decline after CPI. The numbers were in-line and that led to a sigh of relief. But didn’t last as Trump talked about hitting Iran “very hard” today (we’re still waiting for that) and tech stocks struggled ahead of the SpaceX IPO on Friday. Nvidia was down 3.3% and Tesla down 3.7%.
The selling wasn’t limited to tech as some stronger real economy shares reversed, including a 6.2% drop in Caterpillar along with declines in automakers and financials. Energy and consumer staples were among the winners. The 4% decline over four days is the worst such stretch since the post-Liberation Day fiasco in April 2025.
In FX, the US dollar dipped after CPI but the reaction was mostly contained and then slowly faded. The euro managed to battle the US dollar to a standstill despite the poor backdrop and that might offer the bulls some comfort.
In contrast, gold looks like it’s breaking down. It sank $172 and, critically, broke the March low and fell to the worst levels since November. In a rare shift, gold underperformed silver.
There is some late talk about mediators trying to halt an escalation between the US and Iran. There may be a window for that as Trump continues to try to find a way out of this war as his polling numbers slide. He also had something of a gaffe today as he said “I love the inflation.”
