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A record day for the Dow Jones Industrial Average ended with pockets of weakness as Wall Street took a breather from U.S.-Iran peace euphoria.
The U.S. and Iran could sign a memorandum of understanding later this week. This would be a critical step in reopening the Strait of Hormuz, ending the U.S.-Iran war and freeing up oil flows.
The Dow Jones Industrial Average ($DJI) moved 0.64% higher on the day, a retreat after reaching a new all-time high intraday of 52,190.29. But the tech-heavy Nasdaq-100 (NDX) fell 1.89 %, and the S&P 500 (SPX) was down roughly 0.57%.
U.S. crude oil prices (/CL) continued to slide lower, ending the trading day down nearly 5% at about $77 per barrel. The tech sector also saw substantial weakness, with the PHLX Semiconductor Sector Index (SOX) down 5.71% on the day. Financials muscled gains where tech slipped, as measured by a 1.47% rally in the State Street Financial Select SPDR ETF (XLF).
Three things to watch from Tuesday’s market action:
Crude Oil Hits Three-Month Lows: A Gift for Kevin Warsh?
Sinking oil prices are likely to be a key factor in FOMC deliberations that started Tuesday, even if inflated prices at U.S. pumps and everywhere else take time to adjust. The Fed will issue its first interest rate decision under new Fed Chair Kevin Warsh Wednesday afternoon.
Oil price pressure extended across the industry, though Exxon Mobil Corp. (XOM) stayed resilient in a sea of red in the energy sector. Bank of America upgraded the stock to Buy from Neutral, saying their $154 price target does not hinge on a U.S.-Iran peace deal, and that the current price bakes in a long-term, $65-per-barrel price for Brent crude, the international benchmark price that has declined to roughly $78 per barrel. The BofA ExxonMobil target price is well below the stock’s all-time high of $171, and analysts called the stock a “call option should the prospective peace deal fail.”
SpaceX Acquires Cursor for $60B Days After IPO
Space Exploration Technologies Corp. (SPCX), fresh off its IPO, surpassed Amazon.com Inc. (AMZN) as the fifth largest publicly traded company in intraday trading. The Elon Musk-led company announced Tuesday that it will buy AI coding agent Cursor for $60B in SpaceX stock.
The deal will close in the third quarter of this year and aims to offer SpaceX more AI compute capabilities. Cursor currently serves as a competitor against Anthropic’s Claude and OpenAI’s ChatGPT.
Shares of SpaceX rallied 4.77% Tuesday and have now climbed more than 35% since last week’s IPO.
Yum! Brands Sells One of Its Most Iconic Chains
As it moves to fill investors’ plates with better technology and AI capabilities, Yum! Brands (YUM) agreed to sell its Pizza Hut chain for $2.7B Tuesday. Private-equity firm LongRange Capital will buy the franchise outside of mainland China for $1.5B, while Yum China will buy Pizza Hut China for $1.2B.
Yum! Brands said the move addresses consumers’ shift toward out-of-store sales; in March, the company said it would partner with Nvidia (NVDA) on AI efficiencies in food orders, call centers, and performance measurement. The company served investor-friendly news as well by approving $4B in additional share buybacks. The restaurant conglomerate finished Tuesday’s session 2% higher.
Economic Events for Tomorrow (ET)
- 07:00AM: MBA Mortgage Applications (Week of June 12)
- 08:30AM: Retail Sales (May)
- 10:00AM: Business Inventories (April)
- 10:00AM: Pending Home Sales Index (May)
- 10:30AM: EIA Petroleum Status Report (Week of June 12)
- 02:00PM: Federal Reserve Interest Rate Decision
- 02:30PM: Fed Chair Press Conference
Earnings Calendar
- Premarket (Wednesday): Jabil (JBL), Progressive Corp. (PGR), CarMax Inc. (KMX)
- Postmarket (Wednesday): Smith & Wesson Brands, Inc. (SWBI)
Justin Yavorski contributed to this article.
