Markets Update - 6/10/26
A detailed look at what happened today impacting US equity, Treasury, and selected commodity markets, and what to watch for tomorrow.
For those who follow me on X, please note my account was suspended, apparently because I posted some BoA materials. The whole thing is quite odd given how many people post BoA charts, but you can read about it here in the post and comments. You can also refollow me at the new account (and a retweet would be appreciated!). If I somehow get the old account unfrozen, I’ll let you know.
Quick Summary:
US equity indices would start Wednesday’s session in negative territory as tit-for-tat strikes continued following Tuesday’s US strikes against Iran “in response to [Monday’s] downing of a U.S. Army Apache helicopter,” according to US Central Command. In response, the Islamic Revolutionary Guard Corps launched missiles on four American targets, including shelters housing F-35 fighter jets and a command center for the US military at Al-Azraq Air Base in Jordan, state-run IRIB News said on Wednesday.
Nevertheless, equities were moving higher following the open after a cooler than expected core CPI reading gave some encouragement that inflation may remain at a level the Fed could tolerate, avoiding rate hikes at least this year. Rate sensitive small caps saw the biggest boost with the Russell 2000 index (RUT) at one point up +1.4% in the morning trade.
Equities though would turn south, and oil prices would jump, after a social media post from President Trump said Iran had “ taken too long to negotiate a deal that would have been great for them, now they will have to pay the price!!!” Later in comments to media, Trump said “We’re going to be attacking them, attacking them very hard… We hit them hard yesterday, and we’re going to hit them hard again today. We’ll see what happens with the deal. We were really close to a deal, but they keep tapping us along.”
The RUT turned from positive to negative, and the large cap indices, who had never made it firmly into positive territory, fell as well, led by the Nasdaq (-2%) as tech stocks came under pressure once again led by semiconductor companies (although it was the Industrials sector with the largest loss Wednesday -3.4%). Shares of Micron Technology, Advanced Micro Devices and Broadcom were lower, falling for the fourth day in five. The iShares Semiconductor ETF (SOXX) dropped more than 3%. Chip stocks were pummeled at the end of last week, culminating in a 10% decline for the SOXX ETF on Friday. The group then rebounded slightly Monday before the selling resumed Tuesday.
In contrast Coca-Cola Company and TJX Companies were among the stocks hitting all-time highs Wednesday. The Dow Jones Industrial Average ended -1.9% while the S&P 500 was -1.6% and the equal weight SPX -1.3%.
Elsewhere, bond yields would edge higher on the rise in oil prices. Also higher were US natural gas futures, while gold, copper, and bitcoin were lower. The dollar was little changed (all covered in the subscriber section).
Some market commentary:
“The Iran war story is really consequential,” said Jed Ellerbroek, portfolio manager at Argent Capital Management. “Either investors are going to be proven right, that [there’s] nothing to worry about, Trump will take care of it, we’ll get a deal with Iran and the strait will open up, but if not, it feels like oil prices are going to have to go up a lot.”
″[In] this investing environment, it’s impossible to be comfortable,” he added.
“Investors had been banking on a quick peace deal in the Middle East,” said Bret Kenwell at eToro. “The trouble is, the longer it takes to find a resolution, the more likely oil prices remain elevated. And the longer energy prices stay elevated, the stickier inflation can get.”
“It’s very possible that things wrap up in the Middle East and shipping gets back to normal over the course of the rest of the year, in which case we can see inflation come down over time and the Fed could hold off raising rates,” said Chris Zaccarelli at Northlight Asset Management. “But if things stay as they are currently, then all bets are off.”
“Traders are taking the escalation in US-Iran tensions with a grain of salt. President Trump’s tendency to escalate to de-escalate is all too familiar for investors by now.” —Tatiana Darie, Macro Strategist, Markets Live
With inflation still far from the Federal Reserve's 2% target, the idea that the road back to an inflation rate near the Fed's target will be "immediate is becoming more and more of a fantasy," said Skyler Weinand, chief investment officer at Regan Capital, in emailed comments.
“With the UST curve having already absorbed significant repricing on both sides, the report may prompt a near-term pause in rate moves,” said Karen Manna, fixed income investment director at Federated Hermes, in emailed comments.
Financial markets aren’t dealing with just one risk, but a “crowded room where every exit sign points to the same door,” said Stephen Innes, strategist and managing partner at SPI Asset Management. Innes pointed to the tech rout, rising rates, the dollar perking up, gold and bitcoin and the big IPO calendar that’s “like a convoy of cash” looming over the market, in a Wednesday note.
“Following the historic run, [Tech] earned a well-needed breather, with profit taking necessary to keep positions within risk parameters,” said Mark Hackett at Nationwide. “Also, beginning with the Google offering last week, the SpaceX IPO this week, and likely offers from Meta, OpenAI, and Anthropic, institutional and retail investors are likely raising funds to participate.”
Higher yields, the tech rout and a pullback from hot AI sectors are set to usher in a “consolidation phase” of the stock market, said Jimmy Chang, chief investment officer at Rockefeller Global Family Office. “The easy money” has already been made since the late-March lows, Chang told MarketWatch on Wednesday.
“When a parabolic rally ends, it tends to be dramatic,” said Adam Turnquist, chief technical strategist at LPL Financial, in a midday phone call with MarketWatch.
