The Week That Decides the Summer

May CPI on Wednesday. SpaceX pricing Thursday, debut Friday. FOMC eight days away. The market's next directional move is getting made this week — whether it's ready or not.

Last week broke the nine-week winning streak in the S&P 500 with the kind of session the market had been too polite to have for months. A 4.18% Nasdaq drop in a single day. A trillion dollars gone from semiconductor names across two sessions. And a jobs report that blew past consensus by a factor of two, erasing whatever residual hope existed for a near-term rate cut and handing Kevin Warsh an even more complicated debut scenario than he might have expected. Now the market gets to the week that actually decides what the summer looks like.

Reading Last Week's Damage

The semiconductor selloff that followed Broadcom's Q3 AI guidance miss was overdetermined in the sense that it needed a catalyst more than it needed a reason. The sector had been priced for perfection. Broadcom's guidance wasn't bad — $16 billion in Q3 AI chip sales is still a large number. But it fell $1.2 billion short of where the Street was sitting, and the market didn't need a second invitation to reprice. The Nasdaq's worst day since April 2025 was the result. The S&P fell 2.64% on Friday alone, closing at 7,383.

Worth noting: Monday's session opened with a partial rebound. The S&P and Nasdaq held most of early gains while crude oil declined, according to Schwab's market desk. The chip sector's one-day bounce was shallow — just three of eleven S&P sectors finished higher on Monday. The market is stabilizing, but it is not yet in recovery. The difference matters.

The CPI Setup

Wednesday's May Consumer Price Index is the most important data release between now and the June 17 FOMC decision. The consensus is watching for core CPI year-over-year around 3.5%. April PCE already came in at 3.8%. The Producer Price Index follows Thursday. Together, these prints will hand Warsh either a comfortable path to a neutral tone on the 17th or an inflation resurgence narrative that forces his hand toward hawkishness.

"The market doesn't need a cut. It needs a chair who sounds like he's not about to hike. That's what June 17 is actually deciding."

— Monday Outlook framework

The Hormuz variable complicates everything. Brent near $98 means energy's contribution to CPI is not fading. The 60-day MOU framework between the U.S. and Iran — designed to reopen Strait shipping and pull oil off its highs — remains unsigned after U.S. and Iranian forces exchanged strikes in early June. If May CPI reflects the full weight of spring oil prices, the print could surprise to the upside regardless of what the core strip does.

The SPCX Variable

SpaceX prices Thursday and debuts Friday under ticker SPCX on Nasdaq. At $135 per share, 555.6 million Class A shares, and an implied valuation of $1.77 trillion, this is the largest IPO in history. The timing — the week after a major tech selloff, the week before a pivotal FOMC — is genuinely unusual. The deal demands institutional capital at scale. Index inclusion eventually follows, but the first-day float and price discovery event happen into a market that just had its worst Nasdaq session in over a year.

The bull case: SpaceX's debut draws fresh institutional allocation that lifts tech broadly, Musk's combined SpaceX/xAI/Starlink story proves large enough to absorb the demand. The bear case: IPO-day volatility in a fragile tape, with lockup overhang adding to positioning anxiety. Either way, SPCX's first few sessions will be a market story that dominates the week's narrative alongside CPI.

The Broader Posture

Equities are not in a bear market. The S&P remains more than 30% above its 2024 lows. The AI infrastructure buildout is real and continues — Marvell's 12% gain last week on a Jensen Huang endorsement is a useful reminder that the market is discriminating, not panicking. But the valuation framework has been reset by the Broadcom miss, and the reset hasn't finished. The range for the S&P through the FOMC feels like 7,200 on the downside if CPI is hot and 7,600 on the upside if the data is constructive and Warsh threads the needle on June 17.

Energy, defense, and infrastructure continue to benefit from the Hormuz premium. Financials benefit from rates staying higher for longer. Consumer discretionary faces the pressure of sustained elevated oil translated into household budgets. The rotation that started last week — out of pure AI momentum plays, into value and real-economy sectors — is likely to persist through at least the FOMC.