Last night, three scenarios rewrote the market’s fate

—On Monday, Trump rewrote oil prices, but he couldn’t rewrite tech stocks; next, the only force that can truly rewrite the market’s fate is the Federal Reserve.

First, the scenario of oil prices falling.

Last night, oil prices saw a second wave of decline, with the day’s cumulative drop reaching 8%—all because of Trump’s line: “Pausing strikes on Iran is to give negotiations another chance.”

In an Axios interview, Trump said, “We are having very deep negotiations with Iran. If it doesn’t work out, we will resume very tough military actions.” When asked how long he was willing to give diplomatic efforts, Trump replied, “Not too long. Either it happens quickly, or it won’t happen at all.”

But oil hasn’t fallen back to early-July levels yet. At minimum, it needs to drop to $70–$75 for the market to trade again with inflation cooling.

Second, the scenario that “a drop in oil prices didn’t save the market.”

Oil plunged and interest rates pulled back—this should have provided the best environment for high-valued tech stocks. Yet after the Nasdaq opened higher, it turned lower. The Philadelphia Semiconductor Index fell by more than 2%, Nvidia dropped by nearly 5%, and Micron’s U.S.-listed shares broke below their offering price.

Even if the Nasdaq rebounds on Tuesday, watch whether semiconductors repair in sync:

Nasdaq up, semiconductors still down—only index heavyweight stocks are propping things up;

Semiconductors continue to lead the decline—tech stock adjustments are not finished yet;

Nasdaq and semiconductors rise together, and Nvidia recovers at least half of Monday’s losses—only then can we see an initial sign that the slide is stopping.

Third, the scenario of trading a “hawkish Fed.”

Not only did the U.S. dollar index fail to break below 101, it instead climbed above 101.50—an outcome where the market is pricing in the “hawkish Fed uncertainty” scenario in advance.

The market currently still assigns about a 30% chance of a rate hike this week. As long as the 10-year U.S. Treasury yield stays at 4.60% or above, and the dollar doesn’t clearly break below 101, investors won’t fully interpret Monday’s oil-price drop as a sign of easing.

One piece of news today sent shockwaves through Wall Street. Castle Securities released a report saying that Wach could potentially lock in its pledge to restore price stability through a surprise rate hike (its base case has already shifted to a 25 basis-point hike this week), and would formally end the old era that relied on forward guidance.

It’s not telling the market that the Fed will definitely raise rates—it’s reminding the market not to take the idea that standing still through July is a given.