Stocks Falling Hard | Are You Ready for What's Next?
In a Nutshell
Markets are plunging amid Middle East tensions and a South Korean crash that erased $328B, with the Nasdaq hitting new lows. Tomorrow’s CPI report is the critical catalyst—core needs to stay at or below 2.9% and headline at or below 3.8% to avoid further selling. Traders are advised to stay in cash as the market is oversold and directionally bearish.
These notes were generated by AI and may contain inaccuracies.
Markets can get cheaper tomorrow even when they appear cheap today. As of the recording, the NASDAQ is down 1.62% and has hit new lows of 711. The market is oversold on the day.
Two main factors are influencing current market movements:
- The South Korean market was halted for 20 minutes after crashing 8%, resulting in over $328 billion wiped out of the market
- Escalating tensions in the Middle East, including a series of attacks and reports that the US has taken control and is seeking to charge 20% of goods passing through the Strait of Hormuz as insurance
Tensions continue to escalate with ongoing attacks, creating significant market uncertainty.
The CPI data report will be released tomorrow, one hour before markets open. The official source is bl.gov/cpi.
Key Inflation Metrics to Watch
- Core CPI: Current 2.9%, forecasted to remain at 2.9% (no change expected for all items less food and energy)
- Overall CPI: Current 4.2%, expected to drop to 3.8%
The expected decline in overall CPI is attributed to dropping oil prices observed in June.
Market Implications
- If inflation comes in higher than expected, markets are likely to drop further
- For markets to rally, inflation needs to come in at or below expectations
- For markets to drop, inflation needs to come in at or above expectations
The two critical numbers to monitor are 2.9% for core inflation and 3.8% for overall inflation.
SpaceX is down 4% today, hitting lows of 137 and now trading below its IPO price. Just weeks after its IPO, the stock had reached highs of $230. Nearly every investor who purchased SpaceX since its IPO is currently losing money.
Markets are technically oversold. Trump continues attempts to influence market direction, but ongoing uncertainty may push markets lower. The inflation report tomorrow remains a key catalyst.
When in doubt, cash out is advised. The market currently appears directionally bearish, but being so oversold makes opening short positions inadvisable. This creates a very tricky position for traders.
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