Previous Session Close

Tuesday’s session split cleanly along growth-versus-value lines. The Nasdaq 100 surged 1.56%, powered by a 2.15% rip in technology names (XLK), while the Dow slipped 0.15% as financials (-0.63%) and materials (-1.32%) dragged. The S&P 500 eked out a 0.23% gain and the Russell 2000 added 0.87%, suggesting small-cap risk appetite held — at least through the close.

The real tell was the VIX. A 13.37% spike to 21.45 pushed the fear gauge above the 20 threshold for the first time in this move. That kind of VIX expansion on a day the Nasdaq rallied hard signals hedging demand, not complacency. Options desks were buying protection into the close, and overnight price action confirms why.

Overnight Futures & Global Read

All four index futures are flashing red. Nasdaq futures lead the decline at -1.43%, threatening to erase most of yesterday’s tech rally. S&P 500 futures trade near 7,321 (-0.97%), Dow futures shed 0.86%, and the Russell drops 1.15%. The catalyst: headlines that Trump stated Iran will “have to pay the price,” with US-Iran airstrikes already underway according to multiple outlets. SoftBank’s 20% selloff in Japan over the past week adds to the risk-off tone from Asia. This is a broad, correlated move lower — not sector rotation.

Commodity & FX Setup

The commodity complex is sending a mixed but readable signal. Oil is the standout, with WTI jumping 1.58% to $89.59 on a direct geopolitical risk premium from the Iran situation — that keeps energy stocks (XLE, +1.14% yesterday) in play but raises the inflation question the market is already nervous about. Gold, normally the crisis bid, is down 1.69% to $4,188. Silver follows, off 1.20%. That gold-oil divergence — oil up on geopolitics, gold down — suggests forced position liquidation or pre-CPI de-risking rather than a clean flight to safety.

Copper fell 1.02% to $6.238, consistent with the growth-worry read from futures. The dollar index barely moved at 99.94, but the 30-year yield crossing above 5.02% is the bond market’s verdict: sticky inflation isn’t priced out.

Catalyst Watch

CPI Report: The dominant driver. Multiple headlines reference inflation “hitting a 3-year high” and the CPI print is scheduled ahead of the open. A hot number with oil already at $89.59 and the 30-year above 5% could accelerate the futures selloff. A cooler print could snap the tension — but the bar is high given positioning.

US-Iran Escalation: Trump’s “pay the price” rhetoric and confirmed airstrikes create a geopolitical tail risk that wasn’t in yesterday’s close. Oil’s reaction is measured so far (+1.6%), but any escalation during the session could trigger a sharper move in energy and defense names.

SpaceX IPO Anticipation: Tom Lee argues the tech dip ahead of SpaceX’s IPO will reverse after it prices. Whether or not you buy that thesis, the IPO wave (SpaceX + OpenAI) is absorbing capital that might otherwise flow into existing tech positions — worth watching if Nasdaq weakness deepens.

Bottom Line

The bias going into Wednesday’s open is defensive. Futures are pricing in a gap-down of roughly 1% with VIX already above 20, meaning any CPI upside surprise could push volatility sharply higher. The level to watch is the S&P 500 around 7,320 in futures — a break below 7,300 opens a broader risk-off trade. At Luna3, we’re watching the CPI print as the single variable that either stabilises this tape or breaks it wider.

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