May CPI, End to Ceasefire?: 8 Key Items Shaping the Stock Market Wednesday

These are the early headlines and other items poised to influence the market at the start of trading Wednesday. As we share this collection of market drivers, U.S. equity futures point to a down market open. Folks will want to revisit those futures following this morning’s May CPI report out at 8:30 AM ET.

1. the United States carried out strikes against Iranian military targets overnight after Trump accused Iran of shooting down a U.S. Army Apache helicopter over the Strait of Hormuz. Iran retaliated with attacks on U.S. positions across the region, raising fears of a broader confrontation. (Reuters) Iran’s Foreign Ministry spokesperson Esmaeil Baghaei has said diplomatic efforts with the United States could not advance while there were repeated ceasefire violations. (Reuters)

Following that comment from Baghaei, we are seeing headlines with President Trump saying that Iran will “pay the price” and that Iran has “taken too long” to agree to a deal. This suggests a likely end to the U.S.-Iran ceasefire, renewed escalation, and raises questions about oil, the Strait of Hormuz, and supply chain disruptions. For us, it’s ample reason to maintain the Pro Portfolio’s market hedging, inverse ETF positions.

2. For now, the focus will be on Wednesday’s consumer price data for May, which may offer the clearest signal yet on whether a Fed led by Kevin Warsh will keep borrowing costs higher for longer… Economists surveyed by Bloomberg expect annual inflation to accelerate to 4.2% in May, the highest since April 2023, from 3.8% a month earlier. Core inflation, which excludes food and energy, is projected to edge up to 2.9% from 2.8%. (Bloomberg) The odds are overwhelmingly in favor of policymakers keeping the benchmark interest rate at the target range of 3.50% to 3.75% at the conclusion of the June 16-17 policy meeting. But several officials, including voting members of the Federal Open Market Committee like the Cleveland Fed’s Beth Hammack and Dallas Fed’s Lorie Logan, as well as Kansas City Fed’s Jeff Schmid, have warned the central bank may have to raise interest rates to get inflation back to its 2% target. (Barron’s)

Yesterday, we shared our thinking about today’s May CPI report as well as tomorrow’s May PPI report. While the market remains focused on the consumer aspect of inflation, with headline April PPI hitting 6% and the figure for May to inch even higher, barring a near-term collapse in oil prices, consumer inflation pressures are poised to remain at elevated levels.

We’ve factored that into our thinking, which explains our positions in Costco (COST) and TJX (TJX), and no current exposure to the housing market.

3. Taiwan Semiconductor Manufacturing Co. reported a 30% rise in its monthly sales, reflecting continued strength in demand spurred by a global rush to build AI infrastructure. Revenue in May was NT$416.98 billion ($13.2 billion), with combined April and May sales up around 24% from a year ago, according to Bloomberg calculations. Analysts are looking for a 35% increase in second-quarter sales… The company’s global chip supply will fall short of demand for years to come, Chief Executive Officer C.C. Wei told shareholders earlier this month, just days after Nvidia boss Jensen Huang said his firm is still supply constrained. In April, the Taiwanese chipmaker raised its full-year sales guidance and said its capital spending should trend toward the upper end of an existing forecast range of as much as $56 billion in 2026. (Bloomberg)

While the market may focus on Taiwan Semi’s (TSM) combined April and May revenue up 24% year over year, simple math reveals the company only needs to post a modest sequential increase in June to hit that Q2 2026 revenue bogey. However, with customers like Nvidia (NVDA) and Google (GOOGL) reportedly contemplating adding Intel (INTC) as a chip partner, we are likely to see TSM announce another step up in its capital spending program.

That as well as other indicators of tight industry chip capacity, keeps us bullish on the Portfolio’s position in Applied Materials (AMAT).

4. Elon Musk’s SpaceX has drawn more than $250 billion of investor demand for what stands to be the largest-ever IPO, said people familiar with the matter on Tuesday, dwarfing the $75 billion the firm is seeking to raise. The deal’s oversubscription rate is running at three and a half to four times the planned offering size, sources said, which bankers and investors say is the latest sign that demand is strong… (Reuters)

It’s rather clear that momentum for the SpaceX (SPCX) IPO has been building, due in part to the growing number of positive announcements since the S-1 filing. But there is also the aspect of what’s being called “mechanical demand,” which refers to the Nasdaq (NDAQ), FTSE Russell and MSCI (MSCI) set to fast-track the SPCX shares into their indices. This means that about 30% of SpaceX’s free float would be owned by passive investors after just 15 days of trading compared to roughly 4% under previous slower-inclusion rules per the analysis conducted by Intropic.

We’ve seen the impact of individual Portfolio stocks being included in market indices like the S&P 500 and understand the rise and fade associated with the index-inclusion process. The question is do retail investors, especially those being fueled by FOMO, understand this?

5. The U.S. Federal Reserve said on Tuesday it will publish the results of its annual big bank stress tests on June 24. The central ‌bank conducts the test each year to examine how large banks would perform against a hypothetical economic downturn and market strains… A bank’s performance in the annual exercise dictates the size ‌of ⁠the “stress capital buffer” it must hold against potential losses. (Reuters)

Last year, 22 of the U.S.’s largest banks passed the hypothetical severe economic downturn scenario. Passage of these annual tests tends to be followed by announced dividend increases and upsized repurchase programs. That gives us another reason to mark June 24-25 on our calendars.

6. SK Hynix plans to list its shares in ‌the U.S. as soon as August, said two sources familiar with the matter, as the South Korean memory chipmaker seeks to capitalise on strong appetite for AI-linked stocks and broaden its investor base. The U.S. Securities and Exchange Commission is likely to approve SK Hynix’s American depositary receipt listing application during the week of ⁠June 22, one of the sources said. (Reuters)

Another indication the IPO market is poised to have a robust H2 2026, and it could end more than two decades of declining equity supply. Goldman Sachs (GS) estimates the net supply of equity in the U.S. — measured by new shares hitting the market less equity removed by buybacks or companies going private — will be almost flat in 2026, having been in negative territory since 2003. With Goldman calling for an even greater supply of shares as 2026 IPO lock-up periods expire, questions are starting about what the absence of a shrinking supply of shares could mean for stock prices are starting to be asked.

7. Economic data today per TipRanks: MBA Mortgage Application Index (Weekly), Consumer Price Index (May), EIA Crude Oil Stocks (Weekly).

8. Companies reporting today per TipRanks: AM – Chewy (CHWY), Core & Main (CNM). PM – Oracle (ORCL), Stitch Fix (SFIX).

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At the time of publication, TheStreet Pro Portfolio was long AMAT, COST, GOOGL, NVDA, and TJX.