Today was a double hit. The Dow fell more than 950 points, back below 50,000, the S&P dropped 1.62% and the Nasdaq 1.98%. Two shocks landed together: hot inflation and a fresh Iran escalation.
The inflation shock: May’s CPI rose 4.2% from a year ago, a 3-year high, driven mostly by higher energy prices. The fear now is that the Fed may raise rates this year instead of cutting.
The geopolitics: Trump said talks with Iran were taking “too long” and pledged to keep “attacking them very hard.” The US had already struck Iran overnight.
The link worth noting: the two feed each other. Conflict lifts oil, oil lifts inflation, and higher inflation makes rate cuts less likely. So the same conflict that scares markets is also driving the inflation that hurts them. One headline, two reasons to sell.
The positive: even on a brutal day, Coca-Cola and TJX hit record highs. In fear, money moves to steady businesses people use in any economy. Boring won today.