Written by: Trend Research

On Tuesday, Wall Street was hit with two events at once: SpaceX's options started trading, and it revealed its AI credentials with a $60 billion acquisition. Behind this, the major indices quietly diverged, with the Dow alone setting a new historical high, while the Nasdaq and S&P saw concurrent declines. The retreat of tech stocks did not resemble panic; rather, it seemed like the market was buying itself insurance ahead of Wednesday's remarks from Waller.

Market Performance

The Dow Jones rose about 329 points (+0.64%) to near 52,000 points, hitting 52,200 points during trading, marking a historical high for the second consecutive day. The S&P 500 fell 0.08% to close at 7,548.60 points, the Nasdaq dropped 1.15% to 26,376.34 points, and the Russell 2000 also fell in concert. On the surface, there was limited volatility, but beneath lay a clear divide: the retreat of tech stocks nearly accounted for the entire decline of the Nasdaq, while non-tech blue chips buoyed the Dow to a new high. The movement of funds was more intriguing than the indices themselves.

That day, the biggest player was SpaceX. This company, which had been public for only four days, played a double-sided card on Tuesday. The transparency was the acquisition: it officially announced a $60 billion all-stock purchase of AI programming tool Cursor's parent company Anysphere, converting the options secured back in April into a formal merger agreement, with Cursor set to become a wholly-owned subsidiary under SpaceX's AI division. By June, Cursor had achieved approximately $2.6 billion in annualized B2B revenue, and both parties had jointly trained new models for months, expected to deploy synchronously at Cursor and Grok Build soon.
The hidden card was options: SPCX options began trading on Nasdaq on Tuesday, marking the fifth trading day post-IPO with a derivative market, meaning institutions could officially hedge or leverage using options, opening up the trading dimensions for this stock from that day forward. The initial options trading was active, with call contracts dominating, and implied volatility remaining high, reflecting significant market divergence regarding the recent trajectory of this stock. The stock price rose 4.83% to $201.80, marking three consecutive days of gains since the IPO, and at one point during trading its market cap approached $2.9 trillion, surging against the general retreat of tech stocks and becoming the brightest target in the market.

On that day, the 11 sectors of the S&P presented a clear polar pattern. The tech and communication sectors lagged, with the overall retreat of major tech names nearly weighing down the Nasdaq; industrials, financials, and some defensive sectors were relatively resilient, absorbing funds exiting from overvalued growth stocks. Oil prices dropped about 5% to around the $75 range, hitting a three-month low, with imminent agreements between the US and Iran and ongoing expectations for the reopening of the Strait of Hormuz continuing to suppress supply premiums, while concerns over energy costs receded, benefiting the industrial and transportation sectors directly. The yield on the 10-year US Treasury fell to around 4.44% on Tuesday, the lowest in nearly three weeks, as the bond market first digested expectations that inflation pressures might marginally ease. Blue chips, which are less sensitive to interest rates, thus gained some breathing room, constituting the underlying logic for the Dow’s rise to a new high on a day when tech stocks broadly retreated.

Macroeconomics and Outlook

The VIX dropped over 1 point during the day but then climbed back, closing slightly higher above 16, showing that optimistic sentiment had already ceased to expand in one direction before the results came out. Gold held steady around $4,350 per ounce, and Bitcoin consolidated above $66,000, with neither showing significant directional movement, as the market awaited a larger signal. On the same day, the Bank of Japan raised its interest rates to 1.0%, the highest since 1995; however, no significant unwinding of carry trades unfolded, and the Nikkei only rose slightly by 0.46%, with this move having been fully priced in by the market without triggering any chain reactions.

The FOMC meeting led by Waller, which will be revealed early Wednesday, is the real decisive factor of the week. An interest rate holding pattern of 3.50% to 3.75% seems almost certain, with CME futures indicating about a 97% chance of no change; the real highlight lies in the dot plot. In March, the Fed's median was still expecting at least one rate cut within the year, but the May CPI rose to 4.2%, the highest in three years, with energy prices jumping 23.5% year over year. The market widely expects this dot plot to wipe out all remaining rate cut expectations and lift the year-end rate center above 3.6%, effectively signaling the end of the easing cycle. Waller faces a more complex dilemma than mere numbers: he is a rate cut advocate favored by the White House but is stepping into a committee that has seen inflation accelerate for three consecutive months and a rare 8 to 4 split in the April meeting. Cleveland Federal Reserve President Harker has publicly stated that if inflation remains above target, he will push for rate hikes as early as July. This makes Waller's first appearance particularly awkward; if he removes the dovish language from his statement, he effectively closes the door to rate cuts; if he maintains the current wording, the market will see him as compromising with the White House, sacrificing the credibility of the central bank. With the market closed on Friday for the June 19 holiday, the full impact of the FOMC can only be digested over a single complete trading day on Thursday, creating an exceptionally tight time window.

Trend Perspective

On Tuesday, SpaceX executed two simultaneous actions, with the acquisition of Cursor representing the fundamental narrative and the opening of options trading representing the market structure narrative. Combined, on a day when tech stocks broadly fell, this shows that the trading logic for this stock has shifted from IPO euphoria to an AI acquisition platform. The divergence of the Dow reaching a new high while the Nasdaq fell simultaneously tells another story: funds have not left the stock market but are repositioning in anticipation of a potentially more hawkish Federal Reserve.
If Waller's remarks tomorrow lean dovish and the dot plot leaves some breathing room, tech stocks are likely to regain dominance; if he emphasizes two-sided risks based on inflation at 4.2% and completely wipes out rate cut expectations, this quiet rotation in blue chips may just be beginning. The market has long known interest rates would not move; what it is really pricing is how much time is left in this cycle.
What Waller says is more important than what he does, yet he happens to be a new chair who hasn’t spoken yet.