Author: Trend Research

On Thursday (June 11, Eastern Time), Wall Street witnessed a textbook V-shaped reversal. Funds that had fled the day before due to inflation and war turned around collectively 24 hours later.

The Dow Jones surged by 929.97 points (+1.86%) to 50,848.75 points, reclaiming the 50,000 point level; the Nasdaq jumped 2.54% to 25,809.66 points; and the S&P 500 rose 1.75% to 7,394.30 points. The Russell 2000 index rose by 3.02%, leading all major indices. The VIX fear index fell nearly 12%, dropping back below 20.

Interestingly, this large upward candle formed in response to the hottest inflation data of the year.

The Hottest PPI, the Coldest Reaction

In the morning, the May PPI was released, soaring 6.5% year-on-year, the highest since November 2022; it rose 1.1% month-on-month, significantly exceeding expectations of 0.7%. A closer look reveals even scarier details: commodity prices rose 2.8% month-on-month, the largest single-month increase recorded since this data series began in 2009, with about 80% attributed to energy, and wholesale gasoline prices soaring 23.4% in just one month. The first-phase intermediate demand prices, closer to the pipeline upstream, rose 3.2% month-on-month, also setting a historical record.

On any ordinary trading day, this data would be enough to drive the Nasdaq down by 2%. But the market cared about only one thing: Is the war going to end?

In the afternoon, Trump announced the cancellation of a planned strike on Iran that night, stating that Iran's highest levels had approved a draft of a multilateral consensus agreement, and allies like Israel had "principally agreed". Upon the news, WTI crude oil plummeted over 4% to around $86, while Brent fell below $89. Oil prices are the engine of this wave of inflation, and a drop in oil prices directly dismantles the ammunition store of the PPI. Trump himself responded to inflation more bluntly: "I like it, I like this inflation," and claimed that once the war ends, oil prices would "drop like a rock".

The logical chain of funds thus closed: agreement draft, oil price plunge, peak inflation expectations, buy everything. The tech, industrial, and materials sectors that fell the hardest the day before led the rise, while the defensive sectors (consumer staples, real estate, energy) that set historical highs on Wednesday were sold off. In two trading days, the same batch of funds completed a full turnover of positions.

Chip Stocks' Rebound and Software's No-Man's Land

The rebound focused on AI hardware. Micron surged nearly 12%, erasing all losses from the week; SanDisk rose 14%; Intel gained about 10% after Bank of America upgraded its rating, citing a surge in CPU orders; AMD increased by 8%. The Philadelphia Semiconductor Index completed an emotional recovery in just four trading days since the crash on June 5.

On the software side, it's another world. Oracle plunged 9.56%, closing around $184. Beating earnings expectations was meaningless; the market was fixated on cloud revenue falling short of expectations, a negative $23.7 billion in free cash flow, and a $40 billion new financing plan. After hours, Adobe delivered the standard "better-than-expected plus guidance upgrade" combination: Q2 revenue of $6.62 billion, a growth of 13%, and full-year EPS guidance raised to $24.35 to $24.45, with AI-related recurring revenue tripling year-on-year. The stock price's response was an after-hours drop of over 5%. The trigger was CFO Dan Durn announcing his departure for Marvell next Monday, marking the second core executive to leave Adobe within three months following CEO Narayen's announcement of passing the baton in March. The stock has dropped 38% this year, pricing a company with tripled AI revenue as a victim of AI.

The same AI narrative sees hardware being snapped up while software is cast aside. The market's subtext is harsh: Money for computation is visible, but the software moat is invisible. Executives voting with their feet align perfectly with stock prices; the CFO going to Marvell is precisely a chip company.

Tonight, the Largest IPO in History Unleashes

Another motive behind the buying at the end of Thursday is found in Friday: SpaceX has priced its shares at $135 each and will officially debut on Nasdaq tonight under the ticker SPCX.

The scale of this deal is unprecedented: a base issuance fundraising of about $75 billion, nearly three times the previous record holder, Saudi Aramco ($25.6 billion); the issuance is valued at about $1.75 trillion, making it the seventh largest company in the US by market capitalization upon listing, ahead of its sibling Tesla (about $1.6 trillion). Reports indicate that subscription demand exceeded $250 billion, approximately 3.5 to 4 times the fundraising goal. About 30% of the shares are allocated to retail investors, three times the industry norm. Musk still holds over 82% of the voting rights post-issuance.

What traders should also note in their calendars are the subsequent developments: according to regulations, SpaceX will be included in the Nasdaq 100 index 15 days after listing, at which point global index funds tracking QQQ will be forced to mechanically buy in, with estimates ranging from $22 billion to $27 billion.

There are also clear risks. Senator Warren wrote to the SEC requesting to postpone the issuance, questioning the valuation's detachment from financial fundamentals (annual revenue of about $20 billion, corresponding to a valuation of about 88 times sales) and the dual-class share structure; Morningstar directly labeled it as "significantly overvalued." There’s a more practical concern: the $75 billion capital raised will be drained from the secondary market within a week, and the severe volatility in storage and CPU sectors this week is partly a result of funds reallocating positions for the IPO.

Trend Observation

The quality of this rebound raises questions.

The 953-point crash on Wednesday and the 930-point surge on Thursday were driven by the same person's social media account. The draft agreement has not yet been signed, and confirmation from Iran still comes from unofficial channels, while historically, this conflict has seen multiple "near agreement" instances followed by reversals. If a post can pull indices back from the edge of a cliff, another post can just as easily push them back down.

The inflation line has not sounded the all-clear either. The record increase in PPI intermediate demand is the water that has already flowed into the pipeline; even if oil prices peak immediately, it will still transmit to CPI in the coming two to three months. The pricing for a 25 basis point rate hike in December remained unchanged after the data release, and the European Central Bank has already raised rates to 2.25% on Thursday, with the Fed, Bank of Japan, and Bank of England set to meet next week. The market is betting on a perfect script of "war ending, oil prices plummeting, and rate hikes canceled," with none of the three links dispensable.

Counterarguments are also on the table: core PPI month-on-month at 0.4% below expectations, inflation momentum, excluding energy, is indeed slowing; Intel's CPU orders and Micron's demand are real orders, not mere sentiment; if a peace agreement is reached, the inflation path corresponding to an $86 oil price will be completely different from this week's panic pricing. Bulls don’t need a perfect script; they simply need oil prices not to set new highs.

Tonight's opening price for SPCX will be the most honest measure of market risk appetite. $75 billion in new stocks, an 88 times sales ratio, and 4 times oversubscription will see greed and skepticism meet in the same candlestick.