Author: Tide Research
On Thursday (June 11, Eastern Time), Wall Street staged a textbook V-shaped reversal. Funds that were fleeing inflation and war the day before turned around and rushed back in just 24 hours later.
The Dow Jones Industrial Average surged 929.97 points (+1.86%) to 50,848.75, recovering the 50,000 mark; the Nasdaq Composite jumped 2.54% to 25,809.66; and the S&P 500 rose 1.75% to 7,394.30. The Russell 2000 index gained 3.02%, leading all major indices. The VIX volatility index fell nearly 12%, dropping back below 20.
What's interesting is that this big green candle appeared despite the release of the hottest inflation data of the year.
The hottest PPI, the coldest response
The May PPI, released this morning, surged 6.5% year-on-year, reaching a new high since November 2022; it rose 1.1% month-on-month, far exceeding the expected 0.7%. A closer look reveals an even more alarming picture: commodity prices rose 2.8% month-on-month, the largest single-month increase since records began in 2009, with about 80% of that increase coming from energy, including a 23.4% surge in wholesale gasoline prices. Prices for intermediate demand in the first stage, closer to the pipeline upstream, rose 3.2% month-on-month, also a record high.
On any ordinary trading day, this data would be enough to send the Nasdaq plummeting by 2%. But the market only cares about one thing: is the war about to end?
In the afternoon, Trump announced the cancellation of the planned strike on Iran that evening, stating that Iran's top leadership had approved a draft multilateral consensus agreement, and that allies such as Israel had "agreed in principle." Following this news, WTI crude oil prices plunged over 4% to around $86, while Brent crude fell below $89. Oil prices are the engine of this round of inflation, and the plunge in oil prices effectively depleted the PPI's arsenal. Trump's response to inflation was even more direct: "I like it, I like this inflation," and he claimed that oil prices would "fall like a stone" once the war ended.
The logic chain of capital flow is thus closed: draft agreement, oil price plunge, inflation peak expectations, buy everything. The technology, industrial, and materials sectors, which fell the most the previous day, led the gains, while defensive sectors (consumer staples, real estate, and energy), which hit record highs on Wednesday, were sold off. In two trading days, the same group of funds completed a full shift from bulls to bears.
Chip stocks' retaliatory recovery, software stocks' uncharted territory
The rebound was fueled by AI hardware. Micron surged nearly 12%, erasing all of its weekly losses in a single day; SanDisk rose 14%; Intel rose about 10% after Bank of America upgraded its rating, citing a surge in CPU orders; and AMD rose 8%. The Philadelphia Semiconductor Index recovered from its crash on June 5th in just four trading days.
The software side presents a different story. Oracle plunged 9.56%, closing near $184. Better-than-expected earnings are meaningless; the market is focused on lower-than-expected cloud revenue, negative $23.7 billion in free cash flow, and a new $40 billion financing plan. After hours, Adobe delivered the standard "better-than-expected plus guidance revision" combination: Q2 revenue of $6.62 billion, a 13% increase; full-year EPS guidance revised upward to $24.35 to $24.45; and AI-related recurring revenue tripled year-over-year. The stock responded with a further drop of over 5% in after-hours trading. The trigger was CFO Dan Durn's announcement that he would be leaving to join Marvell next Monday. This marks the second core executive departure from Adobe within three months, following CEO Narayen's handover announcement in March. The stock has already fallen 38% this year; in terms of its current share price, a company whose AI revenue is tripling is being priced as a victim of AI.
The same AI narrative unfolds: hardware is snapped up, software is abandoned. The market's unspoken message is brutal: the money in computing power is visible, but the competitive advantage of software is invisible. Executives' choices, driven by their spending, coincide with the stock price; the CFO even joined Marvell, a chip company.
Tonight, the largest IPO in history begins.
Another motivation for the late-day buying on Thursday was for Friday: SpaceX priced its shares at $135 each and will officially debut on Nasdaq tonight under the ticker symbol SPCX.
This deal was unprecedented in scale: the initial offering raised approximately $75 billion, nearly three times the previous record holder, Saudi Aramco ($25.6 billion); the offering valuation was approximately $1.75 trillion, making it the seventh-largest company by market capitalization in the US upon listing, ahead of its sibling Tesla ($1.6 trillion). Reportedly, subscription demand exceeded $250 billion, approximately 3.5 to 4 times the fundraising target. About 30% of the shares were allocated to retail investors, three times the industry norm. Musk will retain over 82% of the voting rights after the offering.
What traders should note on their calendars is what follows: According to the rules, SpaceX will be included in the Nasdaq 100 index 15 days after its listing. At that time, global index funds tracking QQQ will be forced to buy in mechanically, with an estimated size of between $22 billion and $27 billion.
The risks are equally clear. Senator Warren wrote to the SEC requesting a delay in the IPO, questioning the valuation's disconnect from financial fundamentals (annual revenue of approximately $20 billion, corresponding to a valuation of approximately 88 times price-to-sales ratio) and the dual-class share structure; Morningstar directly gave it a "significantly overvalued" rating. There's also a more pressing issue: the $75 billion raised will be withdrawn from the secondary market within a week, and the sharp fluctuations in the storage and CPU sectors this week are partly a result of funds reallocating positions for IPO subscriptions.
Tidal Observation
The quality of this rebound is questionable.
The plunge of 953 points on Wednesday and the surge of 930 points on Thursday were driven by the same person's social media account. The draft agreement has not yet been signed, and confirmations from Iran are still coming from unofficial channels. Historically, this conflict has seen numerous instances of near-agreements followed by reversals. If a single post pulled the index back from the brink, another post would suffice to push it further down the cliff.
Inflation remains a serious concern. The record increase in intermediate demand in the PPI is already in place, and even if oil prices peak immediately, it will continue to transmit to the CPI over the next two to three months. The 25 basis point rate hike in December remained unchanged after the data release, with the European Central Bank already raising rates to 2.25% on Thursday. Next week, the Federal Reserve, the Bank of Japan, and the Bank of England will all follow suit. The market is betting on a perfect scenario: "the war ends, oil prices plummet, and the rate hike is canceled"—all three elements are indispensable.
The opposing arguments are also on the table: the core PPI rose 0.4% month-on-month, lower than expected, indicating that inflationary momentum excluding energy is indeed slowing; Intel's CPU orders and Micron's demand are real orders, not sentiment; if a peace agreement is reached, the inflation path corresponding to an oil price of $86 will be completely different from this week's panic pricing. The bulls don't need a perfect script, they just need oil prices to stop reaching new highs.
Tonight's opening price for the SPCX will be the most honest measure of the market's risk appetite. With $75 billion in new shares, a price-to-sales ratio of 88, and oversubscription of 4, greed and skepticism will meet on the same candlestick chart.
