What just happened?
Within the span of one hour, the Nasdaq 100 index plunged by 1,000 points. The S&P 500 erased $1 trillion in market value—without any major headline news.
The Nasdaq opened up 1%, then slid 3% between 9:30 and 9:57 a.m. Eastern Time.
What does all of this mean?
At 8:30 a.m. Eastern, the PCE inflation rate came in at 4.1%, followed by news that Apple raised prices.
At 9:30 a.m. Eastern, the Nasdaq 100 index was up nearly +1% at one point, then fell -3.5% before 10:00 a.m. on seemingly trivial news.
First, the PCE inflation rate is now officially at 4.1%—the highest level since April 2023.
That’s more than double the Federal Reserve’s 2.0% target, and PCE is the Fed’s preferred measure.
But this news didn’t push the market lower today.
In fact, futures prices rose after the data was released.
Then came the news that Apple ($AAPL ) increased the prices of the Mac and iPad by as much as +25%.
Tim Cook said the surge in chip costs made this price hike “inevitable.”
This is the first major sign of what we’re calling “AI inflation.”
Because inflation driven by AI is being passed on to consumers.
After the news release, Apple stock $AAPL fell by nearly -6% within minutes.
That wiped out roughly $220 billion in market value, and we believe it led to the panic selling we saw at the open.
Why? Because amid record-high risk appetite, there is huge uncertainty.
The reality is that market uncertainty can arguably be at some of the highest levels in history.
And risk appetite is the same.
Investors know that artificial intelligence is the next big thing, and nobody wants to miss the “next big thing.”
But uncertainty is a major byproduct of innovation.
After Apple’s price-hike news broke, investors began to consider the potential impact across the entire industry.
If inflation is above 4% and tech giants start raising prices, what does that mean for the U.S. economy?
And what does it mean for interest rates? The probability of rate hikes is rising.
To make matters worse, the crypto market is seeing continued slaughter.
Within 60 minutes—during the stock-market reversal—nearly $500 million worth of leveraged crypto long positions were liquidated.
That pushed Bitcoin to fall to $58,000 for the first time in 21 months.
Within the span of one hour, the Nasdaq 100 index plunged by 1,000 points. The S&P 500 erased $1 trillion in market value—without any major headline news.
The Nasdaq opened up 1%, then slid 3% between 9:30 and 9:57 a.m. Eastern Time.
What does all of this mean?
At 8:30 a.m. Eastern, the PCE inflation rate came in at 4.1%, followed by news that Apple raised prices.
At 9:30 a.m. Eastern, the Nasdaq 100 index was up nearly +1% at one point, then fell -3.5% before 10:00 a.m. on seemingly trivial news.
First, the PCE inflation rate is now officially at 4.1%—the highest level since April 2023.
That’s more than double the Federal Reserve’s 2.0% target, and PCE is the Fed’s preferred measure.
But this news didn’t push the market lower today.
In fact, futures prices rose after the data was released.
Then came the news that Apple ($AAPL ) increased the prices of the Mac and iPad by as much as +25%.
Tim Cook said the surge in chip costs made this price hike “inevitable.”
This is the first major sign of what we’re calling “AI inflation.”
Because inflation driven by AI is being passed on to consumers.
After the news release, Apple stock $AAPL fell by nearly -6% within minutes.
That wiped out roughly $220 billion in market value, and we believe it led to the panic selling we saw at the open.
Why? Because amid record-high risk appetite, there is huge uncertainty.
The reality is that market uncertainty can arguably be at some of the highest levels in history.
And risk appetite is the same.
Investors know that artificial intelligence is the next big thing, and nobody wants to miss the “next big thing.”
But uncertainty is a major byproduct of innovation.
After Apple’s price-hike news broke, investors began to consider the potential impact across the entire industry.
If inflation is above 4% and tech giants start raising prices, what does that mean for the U.S. economy?
And what does it mean for interest rates? The probability of rate hikes is rising.
To make matters worse, the crypto market is seeing continued slaughter.
Within 60 minutes—during the stock-market reversal—nearly $500 million worth of leveraged crypto long positions were liquidated.
That pushed Bitcoin to fall to $58,000 for the first time in 21 months.