U.S. stock market trend: After the Nasdaq plunges 3.5% intraday, it magically rebounds—tomorrow’s CPI will tell the real story.

Author: Chao Xiang Research

On Tuesday, Wall Street staged a thriller of “kill first, rescue later.”

In the morning, market trading moved calmly. The Nasdaq was up at one point nearly 0.7%, and chip stocks continued Monday’s rebound momentum. In the afternoon, Trump posted on Truth Social saying that Iran shot down a U.S. military Apache helicopter over the Strait of Hormuz. Two pilots were safely rescued, but the U.S. “must respond to this attack.”

The Nasdaq immediately plunged, reaching a deepest intraday drop of -3.5%.

Over the next two hours, the market slowly climbed as it digested Trump’s follow-up comments—“negotiations are still ongoing” and “an agreement could be reached within two or three days”—and ultimately narrowed the decline. The Nasdaq closed down 0.97% at 25,678.82 points, and the Nasdaq 100 fell 1.12%. The S&P 500 dropped 0.26% to 7,386.65 points. The Dow, supported by non-tech component stocks, bucked the trend to close up 0.17% (+86 points) at 50,872.11 points.

From -3.5% to -0.97%, in the final two hours before the close, the Nasdaq recovered more than 70% of its intraday losses. This repair strength reveals two signals: first, the bears don’t dare to heavily add positions on the eve of CPI; second, the market’s belief that “the Iran issue will ultimately be resolved” remains solid—it's only a matter of time.

Helicopter incident: First hit on U.S. assets

This is the first time since the outbreak of the U.S.-Iran conflict at the end of February that the U.S. has lost an Apache helicopter. Although there were no casualties, the mere fact that “U.S. assets were hit” crosses a psychological red line. Trump used the wording “must respond” (must, of necessity, respond), which was one of his toughest statements on the Iran issue.

CNN reported that U.S. unmanned boats rescued the two pilots. Iranian Foreign Minister Araghchi later responded on X: “Foreign military forces near our territory always face the risk of human error, unexpected accidents, or being drawn into crossfire.” The implication is clear: they don’t admit to intentionally shooting it down, but they also don’t deny it.

Vice President Vance said in a CBS interview that the agreement is “very close,” but “there’s still some work to do.” After attending the NBA Finals (Spurs vs. Knicks), Trump told reporters that the final deal could be reached “within two or three days,” and that the Strait of Hormuz would “immediately” reopen after the agreement is signed. He also emphasized that before reaching an agreement, the U.S. blockade of Iranian ports will not be lifted.

The reason the market was able to digest this bomb during the session is that from March to June, investors have already been educated repeatedly by Middle East developments for 100 days: every escalation is followed by a de-escalation; every missile launch is followed by a tweet saying “negotiations are still ongoing.” This is “war fatigue”—not fatigue with the war itself, but fatigue with the market repeatedly being held hostage by the war.

Sector divergence: Tech takes another cut, and the Dow stays steady like an old dog

Among the 11 S&P sectors, only Technology (-2%) and Energy closed lower. The other nine sectors all closed higher. The Dow’s non-tech component stocks held the line.

This has been the consistent pattern for the past week: the Dow stays steady, while the Nasdaq collapses. From June 4 (Thursday) to June 9 (Tuesday), the Nasdaq’s cumulative decline exceeded 5%, while the Dow fell by less than 1.5% cumulatively. There are still no signs that the trend of capital flowing continuously from AI chips into healthcare, financials, and defensive consumer sectors is slowing down.

Nvidia edged down 0.22%, while Micron fell 1.41%. After last Friday’s trillion-dollar chip bloodbath, chip stocks neither experienced a panic-driven second wave of selloffs nor showed a convincing V-shaped rebound—they just traded sideways at low levels while grinding their base. Institutions are waiting for one thing: tomorrow’s CPI.

Crude oil: The helicopter got hit, yet oil prices fell instead

The most counterintuitive move on Tuesday happened in the crude oil market.

After a U.S. helicopter was shot down, oil prices should, under normal logic, have surged. Instead, WTI crude plunged 3.93% to 87.73 USD per barrel, while Brent fell 1.3% to 93.02 USD per barrel. The reasons were three negative factors hitting at the same time: Trump and Vance’s statements that the “deal is right around the corner” suppressed the war premium; OPEC+ approved an additional 188,000 barrels per day of production for July; and after last week’s Non-Farm Payrolls beat expectations, the market began to worry that Fed rate hikes would dampen demand.

WTI breaking below 90 USD is a psychological line. The last time it was at this level was after the first ceasefire in mid-April. If CPI data shows inflation cooling as oil prices fall, this would be the Fed’s best excuse to pause rate hikes.

Gold remained under pressure, holding near the two-month low around 4300 USD. A stronger dollar and rate-hike expectations both suppressed safe-haven buying in precious metals. Silver inched up 0.81% to 68.90 USD, supported somewhat by industrial demand.

Bitcoin fell to around 62,500 USD. In 2026 to date, it is down 27%, and it is already cut in half from its all-time high. Spot BTC ETFs have seen four consecutive weeks of net outflows, with a total of 5.4 billion USD withdrawn over the past four weeks. Strategy (formerly MicroStrategy) plunged 24.29% last week, marking its worst weekly performance since the FTX collapse in November 2022—bleeding even among the most steadfast long-only institutions in crypto.

Outlook: CPI day, the most important 8:30 in June

Tomorrow (Wednesday) at 8:30 a.m. Eastern Time, May CPI data will be released.

The weight of this data point goes beyond being just a monthly economic indicator. It is the key evidence the market uses to answer all of the following questions:

Last week’s overheated employment of 172,000 non-farm jobs—has it already transmitted into prices? How deeply has oil-price inflation, boosted by the Middle East war, penetrated core inflation? At the Fed meeting on June 16-17, will they keep waiting-and-seeing, or will they clearly turn hawkish?

The market is currently pricing a 70% probability of a December rate hike. If CPI comes in hotter than expected, that probability could jump toward 90%, and the Nasdaq would face another round of selling pressure. If CPI unexpectedly cools, especially core CPI, it will become the strongest catalyst to stop the chip stocks from falling, and short covering could trigger a fierce technical rebound.

After Wednesday’s close, Oracle will release its earnings report. As a key player in AI cloud infrastructure, it has more than 500 billion USD in remaining performance obligations (RPO). The market needs to see whether these contracts are turning into real revenue. Thursday will be a triple blow day: PPI, the ECB rate decision, and OPEC monthly report.

Even a bigger IPO event is 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 USD. The World Cup starts in the U.S. on June 11.

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

Over the past six trading days, the Nasdaq has fallen from the record high of 27,094 points to 25,679 points—a drop of 5.2%. The VIX has surged from 16 to 19. The chip sector has evaporated more than 1 trillion USD. The Middle East ceasefire is effectively nonexistent. Bitcoin has been cut in half. This is a market under comprehensive pressure.

In this context, if CPI prints below 4%, it will be like a shot of adrenaline. If it comes in above 4.5%, last week’s plunge may have only been the appetizer.

At least for today, one thing is already clear: oil prices falling below 90 USD indicates that the market is pricing in peace. But whether peace can truly arrive depends on whether the so-called Iran deal that can be reached “within two or three days” is another empty bear promise—or the real thing this time.

It has been 100 days. The market no longer wants to guess. It only wants to see the result.