The Dow closed at a record yesterday. The Nasdaq sold off more than 1%. Same session, opposite directions.
That gap is the setup heading into Warsh's first Fed decision this afternoon. Here is where everything stands.
The Dow-Nasdaq split is the widest in weeks. The Dow gained 0.6% Tuesday to close near 52,000, a new all-time high, powered by cyclicals and financials rotating in. The S&P 500 dropped 0.6% to 7,511. The Nasdaq fell 1.2% as investors took profits in the highest-multiple chip names. AMD dropped 7.3%. Broadcom fell 4.4%. Intel slid 8.5%. This is the second major leg down for semis since the June 5 crash that wiped roughly $1.3 trillion from the sector. The selling is concentrated in rate-sensitive growth, not broad equity weakness.
The dot plot is the trade, not the rate. A hold at 3.50% to 3.75% is essentially priced in. Nobody expects a move. But the projections and press conference are live ammunition. Analysts widely expect the June dots to eliminate the one rate cut that remained in March's median forecast. Bank of America flagged that at least three voting members may project rate hikes this year. JPMorgan expects the statement to drop language that hinted at future easing. Most Wall Street Fed watchers believe Warsh will withhold his own dot entirely, either on principle or because he has been in the chair less than a month. The 10-year yield settled at 4.44%, down from the 4.55% area it hit last month. If the dots tilt hawkish, that spread compresses and high-multiple tech absorbs another repricing.
Oil hit a three-month low and it changes the inflation math. WTI dropped into the mid-$70s, the lowest level since early March, falling for a fifth straight session. The Iran deal signing is confirmed for Friday at Bürgenstock, Switzerland. A week ago we argued the 4.2% CPI print was almost entirely an oil shock, with core at just 2.9%. Crude was near $90 then. At $75, the energy overshoot reverses in next month's data. Whether the dot plot reflects that or not is the question that moves markets this afternoon.
SpaceX filed the Cursor merger. SPCX closed at $201.80 Tuesday, up nearly 50% from its $135 IPO price less than a week ago. The all-stock deal values Cursor at roughly 15 times its $4 billion annualized revenue run rate. Options began trading on Nasdaq yesterday. Morningstar cut its fair value estimate to $62 per share, calling the stock expensive even before the dilution. We covered the deal in full yesterday.
La-Z-Boy quietly delivered one of the best beats of the quarter. LZB reported adjusted Q4 earnings of $1.26 per share versus the $0.82 consensus, a 54% beat. Retail written sales grew 11%. Operating margins expanded to 9.9% from 9.4%. Shares jumped roughly 13% after hours. The earnings call is this morning at 8:30 ET.
The rate decision drops at 2:00 PM. Warsh's first press conference starts at 2:30. Futures are mixed this morning.
