Nasdaq 100 Falls 2% as Chipmakers Halt Solid Run: Markets Wrap
(Bloomberg) — A rally that sent the US stock benchmark to the brink of a record paused before the first Federal Reserve rate decision under Kevin Warsh, with a another slide in oil prices driving bond yields lower.
In a rotation to economically sensitive areas of the market, a rout in chipmakers after a solid run dragged down the S&P 500. The Nasdaq 100 fell about 2%. A renewed advance in SpaceX drove the rocket company to a striking distance of Amazon.com Inc.’s value. The Dow Jones Industrial Average hit fresh all-time highs. Oil sank below $80 on expectations for a revival in supplies.
As the US and Iran prepare to formally sign an interim peace deal Friday, traders are looking for clues from policymakers on the impacts of the war. With a well-flagged hike from the Bank of Japan seen as an exception, most developed-world central banks including the Fed are expected to make no changes this week.
“For markets, a ‘higher-for-longer’ rate backdrop, rather than a renewed tightening cycle, can remain supportive of valuations, in our view, particularly if it reflects resilient economic growth alongside gradually moderating inflation pressures,” said Mona Mahajan at Edward Jones.
She says easing geopolitical tensions could help alleviate inflation pressures and reduce bond yields, potentially driving a broadening of leadership into cyclical sectors and previously lagging corners of the market.
The Fed meeting may not deliver a hike, but it could bring something more important: The first real signal of how Warsh plans to approach inflation, noted Bret Kenwell at eToro. Investors are trying to figure out whether the new Fed chair will use his first major moment to reset expectations, he added.
“In a matter of months, the narrative has shifted from ‘how many rate cuts this year?’ to ‘how many rate hikes are on the table?’” Kenwell said. “That’s a big swing, and it puts Warsh in a difficult spot: He can acknowledge the recent pullback in oil prices and sound patient, but he can’t afford to look complacent if broader inflation pressures are moving the wrong way.”
Investors are wondering how, specifically, the Warsh Fed will change the way it communicates with them, including whether the quarterly Summary of Economic Projections, or SEP, might be slimmed down. That document includes forecasts for key economic variables and the famous “dot plot” showing where policymakers see interest rates heading.
At TD Securities, the strategists are betting on a drop in the easing bias, upward revisions to inflation forecasts, and the median dot showing no cuts in 2026 as well as next year. They say a strong pushback from Warsh is unlikely as that would damage his credibility and effectiveness.
“Depending on the tone and how much this meeting reshapes investor expectations, it could dictate the market’s narrative for the next several weeks, at least until earnings season takes over,” Kenwell concluded.
Corporate Highlights:
SpaceX formally agreed to take over Cursor in a deal that values the artificial intelligence coding startup at $60 billion, cementing a key part of Elon Musk’s efforts to catch up with rivals on coding tools. US Commerce Secretary Howard Lutnick warned Anthropic PBC in a letter last week that it would need government permission to grant foreign nationals access to its most advanced AI models and threatened criminal and civil penalties if the firm failed to comply, according to a copy obtained by Bloomberg News. Yum! Brands Inc. is selling its struggling Pizza Hut division for $2.7 billion, allowing the restaurant operator to focus on its better-performing KFC and Taco Bell chains. Robinhood Markets Inc. said it’s cutting 10% of its workforce, a reduction of around 300 positions, to “remain lean and disciplined” as it develops new products. Rivian Automotive Inc. is cutting hundreds of jobs as part of a push to reduce costs while it rolls out a new line of electric vehicles. What Bloomberg strategists say…
“The June FOMC meeting will now decide whether participation in the current rally can broaden. While no dramatic policy pivots are expected, traders are likely trading risks around communication.”
—Michael Ball, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 fell 0.6% as of 4 p.m. New York time The Nasdaq 100 fell 1.9% The Dow Jones Industrial Average rose 0.6% The MSCI World Index fell 0.4% Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.2% to $1.1608 The British pound was little changed at $1.3423 The Japanese yen was little changed at 160.46 per dollar Cryptocurrencies
Bitcoin fell 1.4% to $65,545.41 Ether fell 1.4% to $1,790.46 Bonds
The yield on 10-year Treasuries declined four basis points to 4.43% Germany’s 10-year yield declined two basis points to 2.93% Britain’s 10-year yield declined two basis points to 4.79% Commodities
West Texas Intermediate crude fell 4.9% to $76.80 a barrel Spot gold rose 0.5% to $4,332.05 an ounce ©2026 Bloomberg L.P.
