Rate Hikes Are Coming 🏦

Welcome back to the Day Trading newsletter 📈

The biggest story in markets right now is the macro U-turn. Wall Street spent two years betting the Fed's next move would be a cut.

This week, two major banks said get ready for hikes instead, and the dollar, gold and crypto are already feeling it.

Let’s get into it 👇️ 

🔽 Wall Street's tech selloff deepened Tuesday, dragging the Nasdaq down 2.21% to 25,587.04 and the S&P 500 down 1.44% to 7,365.46. The pain was concentrated in chips, where the VanEck Semiconductor ETF sank about 7%, Western Digital fell 8.4% and Qualcomm dropped 6.9%, as a global AI-memory panic that began in Asia rolled into U.S. trading.

🤖 The market split in two on Wednesday: the Dow rose 0.35% to a record 51,848.90 even as the Nasdaq slipped 0.43% to 25,476.44. Money rotated out of crowded megacap tech and into value and smaller companies — the Russell 2000 added 0.37% — a sign some investors are hunting for ground beyond the handful of AI giants that have led the market all year.

💰️ Micron blew past Wall Street's fears, posting record quarterly revenue of $41.46 billion — more than quadruple a year earlier — after the bell Wednesday. Adjusted profit came in at $25.11 a share versus about $20.80 expected, and the company guided current-quarter revenue to roughly $50 billion. The stock jumped about 15% after hours, easing fears that AI spending isn't producing real profits.

🍏 Apple is raising prices on its Macs and iPads, its first move to pass a worsening memory shortage on to shoppers. The MacBook Air jumps to $1,299 from $1,099, with Apple saying it has never seen component costs climb this fast. Shares fell about 5% — their worst day since February — as the AI memory boom started hitting consumers' wallets.

🚚 FedEx topped Wall Street's profit forecast in its first quarter as a standalone parcel company, beating the roughly $5.95 a share analysts expected. Revenue rose about 13% to around $25 billion, the first results since the June 1 spin-off of FedEx Freight. Shares slipped anyway, as a cautious forward outlook overshadowed the earnings beat.

🛢️ U.S. crude briefly dipped below $70 a barrel Wednesday, its lowest since early March, before settling near $70. Easing tensions with Iran — including Trump's claim that ships will face no tolls passing through the Strait of Hormuz — keep pulling prices lower. Trump also ordered the Justice Department to investigate oil companies for not cutting pump prices faster.

🍟 Wendy's stock surged more than 20% Wednesday as retail traders piled into the beaten-down burger chain. The pop followed the appointment of former Potbelly executive Steven Cirulis as chief financial officer, but the real fuel was meme-style buzz — Wendy's was the second-most mentioned ticker on Reddit's trading forums over 24 hours.

Two of Wall Street's biggest forecasters tore up their playbooks this week.

Bank of America now expects the Federal Reserve to raise interest rates three times in 2026: quarter-point moves in September, October and December that would lift the benchmark rate to 4.25%-4.5%.

Deutsche Bank, which had penciled in no change all year, now sees two hikes.

Both banks say the Fed could start raising rates as soon as September.

The trigger was new Fed Chair Kevin Warsh's first meeting on June 17: policymakers held rates steady, but their own projections flipped, with 9 of 18 officials now pencilling in at least one 2026 hike. This was a reversal from March, when the median call was for cuts.

The Fed also jacked up its 2026 inflation forecast to 3.6%, from 2.7% in March.

A flip from cuts to hikes reprices almost everything.

"Higher for longer" means mortgages, credit-card rates and business loans stay expensive, and it changes the math on every risky bet.

The dollar has already ripped to its highest since May 2025. Assets that pay no interest get punished when rates climb. Gold tumbled below $4,000 an ounce, its lowest since November, and Bitcoin slid toward $60,000.

Traders now put the odds of a September hike around 66%, up from roughly 29% a week earlier.

What to watch:

• Warsh's tone in his coming speeches

• The next inflation readings (especially the Fed's preferred PCE gauge)

• Whether the bond market keeps pricing in hikes

If inflation stays sticky, this "higher for longer" trade has plenty of room left to run.

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⚠️ Disclaimer: Not financial advice. Do your research before making any trades.