Two days ago the market said it didn't need the Iran deal anymore. Today the Dow fell 621 points. The US and Iran traded heavy fire overnight. Kuwait's air defenses intercepted incoming targets. Oil jumped back to $96. And the Strategic Petroleum Reserve — the emergency backup I wrote about last week — fell to 357 million barrels, within reach of its lowest level since the reserve was first filled in the early 1980s. The government's emergency oil is running out. The war is getting hotter. And after the close, CrowdStrike beat on every line, announced a 4-for-1 stock split, and fell 7%. When companies beat and stocks fall, the price has already moved on to the next worry. Today's worry is that the market got ahead of itself.
The Close
Worst day in weeks. The Dow fell 621 points — 1.2% — to close at 50,687. The S&P 500 lost 0.7% to 7,554. The Nasdaq dropped 0.9%. The Russell fell 1.25%. All four indexes red. Oil surged 2.4% to $96.02 on the strikes overnight. Brent climbed to $97.81. Two days of record highs erased in six hours.
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| Dow Jones | 50,687 | −621 pts | ||
| WTI Crude | $96.02 | +2.4% | ||
| SPR Reserve | 357M bbl | near 1980s low | ||
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| Energy |
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+1.0% | ||
| Consumer Staples |
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−0.2% | ||
| Health Care |
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−0.3% | ||
| Materials |
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−0.4% | ||
| Utilities |
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−0.5% | ||
| Real Estate |
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−0.6% | ||
| Industrials |
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−0.7% | ||
| Information Technology |
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−0.8% | ||
| Consumer Discretionary |
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−0.9% | ||
| Communication Services |
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−1.1% | ||
| Financials |
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−1.5% | ||
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The selling had a clear trigger. The US and Iran launched new strikes while the market was closed. Kuwait reported intercepting hostile targets. Trump said Iran agreed to give up nuclear weapons, then added "but they can change their mind" — which isn't exactly the kind of language that calms a trading floor. Oil went straight up. The software names that led the rally this week — ServiceNow, Adobe, Salesforce — all pulled back hard. The alternative asset managers got hit even harder: KKR fell 5.7% and Blackstone lost 5.5% after Switzerland's Partners Group capped withdrawals from one of its funds.
Marvell kept running — up another 12%, now up 37% since Jensen Huang called it the next trillion-dollar company on Monday. Macy's gained 2.3% after beating and raising guidance with its best first-quarter comparable sales in four years. ADP showed 122,000 private-sector jobs added in May, slightly above the 117,000 expected.
The SPR hit 357 million barrels for the week ending May 29. Another 8 million barrels withdrawn in a single week. It's now approaching the lowest level since the reserve was first created. And SpaceX priced its IPO at $135 per share — a $75 billion offering, the largest in history.
After the close, CrowdStrike reported. Revenue of $1.385 billion beat estimates. Earnings of $1.10 beat. The company raised its outlook, boosted ARR guidance by 5%, and announced a 4-for-1 stock split. The stock fell 7%. Broadcom also reports tonight.
What The Market Is Pricing In
Stocks don't price today. They price the next six to twelve months. And what the market priced today is a reminder that oil still matters — and a growing suspicion that the rally has run ahead of the earnings.
Here's the chain. The S&P gained 20% in nine weeks. That's one of the fastest nine-week runs in history. The market climbed through hot CPI, hot PPI, a 30-year yield above 5%, rate-hike odds at 50%, and an active war in the Middle East. It climbed because it priced in falling oil, an Iran deal, and an AI earnings cycle that kept delivering. For two days this week, the market said it was done worrying about oil.
Today oil came back. The US and Iran traded fire. Kuwait got hit. And the Dow fell 621 points. That's the market telling you: I can look through the oil risk when it's fading. I can't look through it when it's getting worse. The direction of oil matters more than the level. At $88 last week, oil was falling and the market was buying. At $96 today, oil is rising and the market is selling. Same barrel, different direction, different outcome.
The Dow fell 621 points and CrowdStrike beat on every line and fell 7%, and together those two facts tell you the market has reached the point where good news can't hold the tape when the macro turns against it. When a stock beats estimates, raises guidance, and announces a split — and falls — it means every buyer who wanted in already got in before the print. The good news was in the price. On Wall Street, they call that sell the news. It happened to Nvidia on May 21. It happened to CrowdStrike tonight. When it starts happening to two or three of the biggest tech names in the same earnings season, it means the rally needs something new — and the news it got today was more fire, more oil, and a reserve that's almost empty.
I saw this dynamic in August 2024. The market was at records. Nobody was watching Japan. Then the Bank of Japan raised rates, the yen strengthened, and the carry trade unwound in a day. The Nasdaq fell 3% before anyone finished their morning coffee. The risk that takes a market down is usually the one it stopped watching. For two days this week, the market stopped watching oil. Today oil reminded it why that's a bad idea.
The forward-looking read: Broadcom reports tonight. The stock is a $2 trillion company — bigger than two of the Mag Seven. Traders are pricing an 8% swing. If Broadcom beats and the stock goes up, the sell-the-news pattern doesn't spread and the selloff today is a one-day pullback. If Broadcom beats and falls — like Nvidia, like CrowdStrike — the AI trade has a ceiling, and Friday's jobs report becomes the next test of whether the macro can hold the rally together. The SPR at 357 million barrels means the government has almost no emergency oil left. If oil stays above $95, the inflation read gets worse, the Fed gets more hawkish, and the 20% rally in nine weeks starts to feel like it borrowed from the future.
What's Next
Three things I'm watching…
01 — Broadcom earnings tonight after the close
A $2 trillion company reporting after the worst day in weeks. Traders are pricing an 8% swing — about $160 billion in market cap in one direction or the other. If Broadcom guides above expectations and the stock rallies, the AI trade still has legs and today was just oil noise. If it beats and falls — the CrowdStrike pattern — then the sell-the-news problem is spreading across the sector and the ten-week rally has run its course.
02 — May jobs report Friday June 5 at 8:30 AM Eastern
ADP came in at 122,000 today — a modest beat. Friday's nonfarm payrolls number is the one that matters. Above 200,000 with wages rising means the Fed stays hawkish and oil-driven inflation stays in focus. Below 150,000 with wages cooling gives Warsh cover to signal patience at the June 17-18 FOMC meeting. After a 621-point selloff, the market needs a soft-enough number to calm the rate-hike talk without being weak enough to flag recession.
03 — Oil direction through Friday
WTI went from $87 last week to $96 today. That's a 10% round-trip in five sessions. The direction matters more than the number. If oil closes the week above $95, the inflation narrative from three weeks ago comes back and the 30-year goes back toward 5.1%. If it falls back below $90 on renewed deal progress, the nine-week rally gets another week.
The Dow fell 621 points. CrowdStrike beat and fell. Oil is back at $96. And the SPR is almost empty. Two days ago the market said it didn't care about oil anymore. Today was the cost of that confidence.
That's it for today. See you tomorrow after the close.
