The May PPI came in at 6.5% year over year — the worst wholesale inflation reading in nearly four years. The ECB hiked rates for the first time in response to the Iran war. Oracle beat on earnings and fell 12% on a disappointing cloud forecast and an equity raise. Trump posted that he would hit Iran "very hard tonight" and seize Kharg Island — the terminal that handles 90% of Iran's oil exports. And the Dow gained 900 points. Because both Trump and Iran signaled that a deal is close. The market looked at the worst inflation data of the year, a central bank hiking, a $2 trillion tech stock cratering, and a threat against Iran's most important oil facility — and decided none of it matters if the war is about to end. Tonight, SpaceX prices at $135 a share. Tomorrow it trades. The largest IPO in history launches into a market that is betting everything on peace.
The Close
Nine hundred points up — the day after nine hundred fifty down. The Dow surged 900 points, its biggest gain since last Thursday's rotation day. The S&P 500 and Nasdaq both rose sharply, with chip stocks leading the charge: Intel gained 10%, Applied Materials and Arm Holdings each rose nearly 8%. The rally started modest in the morning and built through the afternoon as the Iran deal headlines got louder.
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| Dow Jones | deal-is-close rally | +900 pts | ||
| May PPI (annual) | 6.5% | 4-year high | ||
| SpaceX (SPCX) | priced at $135 | 3x oversub'd | ||
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| Information Technology |
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+2.5% | ||
| Industrials |
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+2.0% | ||
| Financials |
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+1.8% | ||
| Consumer Discretionary |
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+1.5% | ||
| Materials |
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+1.2% | ||
| Health Care |
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+1.0% | ||
| Communication Services |
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+0.8% | ||
| Real Estate |
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+0.5% | ||
| Consumer Staples |
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+0.3% | ||
| Utilities |
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+0.2% | ||
| Energy |
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−0.5% | ||
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Oracle was the exception. Down 11.9%. The company beat on the top and bottom lines last night, but the cloud revenue number came in soft and the company announced plans for an equity and debt raise. After Alphabet's $80 billion stock sale last week, Oracle's capital raise was the second megacap AI company in ten days to tell shareholders: we need more money. The market is still willing to fund AI — but it's starting to charge a tax for the dilution.
The PPI told a different story than the stock market. Producer prices rose 1.1% in May, month over month. That's the sharpest one-month jump in nearly four years. Year over year, the PPI sits at 6.5%. The BLS confirmed what everyone has been watching: wholesale prices are being driven by energy — and energy is being driven by the war. Jobless claims rose to 229,000, above the 220,000 expected.
The ECB hiked rates to 2.25% — the first major central bank to raise in direct response to the Iran conflict. That matters for next week's FOMC. If the ECB felt the inflation data was bad enough to act, the pressure on Warsh to follow just went up. The Bank of Japan and Bank of England also meet next week.
SpaceX priced its IPO tonight at $135 per share — a $1.75 trillion valuation. Demand exceeded $250 billion against a $75 billion offering. BlackRock alone sought at least $5 billion worth of shares. Shares begin trading tomorrow on the Nasdaq under the ticker SPCX. It is the largest public offering in Wall Street history.
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 — despite the worst PPI in four years, a central bank rate hike, and a Trump threat against Iran's biggest oil terminal — is the end of the war.
Here's the chain. Yesterday: CPI at 4.2%, an Apache shot down, the Dow fell 950. Today: PPI at 6.5%, the ECB hiked, Trump threatened Kharg Island, and the Dow gained 900. The inflation data got worse. The rhetoric got hotter. And the market went up. That only makes sense if the market has decided the war is ending — and that the inflation, the oil spike, and the rate-hike talk are all about to reverse.
Trump said the deal is close. Iran said the deal is close. Those two sentences, from two sides of a war, are worth 900 Dow points. Because if the deal happens, oil drops from $90-plus to $70. If oil drops to $70, the July and August CPI readings come in dramatically lower. If CPI falls, the Fed doesn't have to hike. And if the Fed holds, the 10-year eases, yields drop, and every stock in the S&P gets revalued higher.
The Dow gained 900 points on the worst PPI in four years because the market is now pricing the end of the war — and if the war ends, the inflation ends with it. That's the entire bet. One trade. One thesis. Everything — the CPI, the PPI, the rate-hike odds, the chip selloff, the ECB hike — gets unwound if the war stops and oil collapses. The market decided today that the probability of that outcome just went up. Not to 100%. But to enough to buy 900 points of hope.
I saw this exact trade on April 8. The first ceasefire. The Dow surged 1,312 points that day — the biggest gain since April 2025. The market priced peace. Oil cratered. Yields fell. Stocks ripped. And then the ceasefire fell apart in two weeks. The market gave back every point. Today feels like April 8 again. The hope is real. The question is whether the deal is.
What's Next
Three things I'm watching:
01 — SpaceX IPO debut Friday June 12
Shares trade tomorrow on the Nasdaq under SPCX at a $1.75 trillion valuation. Demand was 3x oversubscribed. BlackRock sought $5 billion. If SpaceX opens above $135 and holds — in a week where the S&P has swung thousands of points — it confirms that risk appetite is alive underneath the volatility. If it breaks below the IPO price on day one, the largest offering in history becomes the signal that the market's capacity for new risk has been exhausted.
02 — Iran deal over the weekend
Both sides said it's close. Trump is also threatening to seize Kharg Island and take "total control" of Iran's oil sector. Those two statements can't both be true at the same time. This weekend tells you which one was real. If a deal framework is announced by Monday morning, oil opens below $80 and the S&P bounces back toward 7,400. If Trump hits Kharg Island instead, oil goes to $120 and Monday is the worst open of the year.
03 — FOMC June 17-18 in six days
Warsh's first meeting. The ECB just hiked. PPI is at 6.5%. CPI is at 4.2%. The market is pricing a hold — but if the deal falls apart and oil spikes, the hold becomes a hike. The press conference matters more than the decision. Warsh's first public words as chair will tell you whether the Fed is leaning toward patience or action. The Kraken blog reported the Fed may scrap the dot plot at this meeting. If they do, the market loses its forward guidance and has to trade blind into the summer.
The Dow gained 900 points on the hope of peace. Tomorrow SpaceX trades. This weekend, Trump decides: deal or Kharg Island. The market made its bet today. By Monday we find out if it was right.
That's it for today. See you tomorrow after the close.
