Originally published June 25, 2026 on dependability.us. Archived here as part of the Dependability research record.
As of Thursday, June 25, 2026 (4:00 PM ET close), the S&P 500 closed at 7,357.49, essentially flat at -0.01% on the day versus Wednesday's 7,358.22 close, and -1.54% week-to-date versus Monday June 22's 7,472.79 close (Monday was the week's first trading day; Friday June 19 was the Juneteenth holiday). The VIX rose +0.26 points to 18.89 (+1.40% on the day) from Wednesday's 18.63, the 10-year Treasury yield fell -1 bp to 4.39% (TNX), TLT held essentially flat at $87.35 (-0.03%), the dollar eased modestly to 101.44 (-0.17%), and WTI crude rebounded to $71.49 (+1.63% on the day). Gold firmed to $369.46 (+0.97% on the day). The session was a binary test that did not break the market: the morning's hot May Core PCE print (+0.3% MoM, +3.4% YoY — a three-year high) validated the Warsh SEP hike bias, but the equity tape shrugged it off with a -0.01% close and the bond market actually rallied further (10Y -1 bp). Leadership rotated back toward cyclicals (XLI +2.17%, XLV +1.49%, XLB +1.33%, XLK +0.83%) and away from the defensive bid (XLY -1.49%, XLP -0.59%, XLC -0.90%), with Energy leading the recovery on the oil rebound (XLE +0.97%). The after-the-close catalyst is FedEx (FDX) Q4 fiscal 2026 earnings — the binary read on global trade volume and industrial demand.
What Drove the Tape
The hot Core PCE print was supposed to break the market. It didn't. The May Core PCE release at 8:30 AM ET came in at +0.3% MoM versus consensus +0.2%, with the YoY rate hitting 3.4% — the highest since October 2023 — and headline PCE at 4.1% YoY (per CNBC and CBS News). This is the textbook hawkish-print binary: it validates the Warsh SEP's dot-plot flip from cut to hike, and by the prior forecast's logic, should have driven a VIX re-test of 22+ and a 10Y re-test of 4.60%. None of that happened. SPX closed essentially unchanged at 7,357.49 (intraday range was wide — opened at 7,404.91, sold off to the 7,330s, recovered to the 7,350s), VIX rose only marginally to 18.89 (+1.4%), and the 10Y yield fell 1 bp to 4.39%. This is the cleanest regime signal of the week: the bond market is NOT buying the hike narrative, and the equity tape is treating the inflation surprise as 'transitory-but-lingering' rather than regime-changing.
Why the market shrugged the hot print — and why long-term investors should pay attention. Three structural drivers are in play. First, the oil tape is doing disinflation work : WTI at $71.49 is still -15.78% WTD from $84.88 — the largest two-week drop since Q4 2024. Lower input costs feed directly into headline CPI/PCE with a 1-2 month lag, meaning the June/July prints should soften even if May was hot. Second, the bond market is signaling growth concerns, not inflation concerns : a 10Y yield at 4.39% — 6 bp below the post-FOMC peak (4.45% Friday June 12) — means the long end is fading the hike narrative. A flatter curve with the long end falling is the textbook bond-market signal that the Warsh SEP will be tested by softer data within 60-90 days. Third, the equity market is positioned for "hawkish-but-not-recessionary" : defensive leadership faded today (XLY -1.49%, XLP -0.59%, XLC -0.90%) and cyclical leadership re-emerged (XLI +2.17%, XLV +1.49%, XLB +1.33%). For long-term investors: this is the long-term bull case the bond market has been telegraphing all week. Soft disinflation is structural. The Iran de-escalation is structural. U.S. growth and AI capex are structural. The hot May print is noise; the trajectory is what matters.
FedEx (FDX) earnings after the close are tonight's structural read on global trade. The forecast before earnings is for $4.04 EPS on $22.1B revenue (LSEG consensus), with the TPC segment under pressure from the UAW/port-labor overhang and the Express segment watching for ground-network margin improvement. A clean beat with raised FY guidance would confirm the industrial recovery thesis and support XLI's leadership (XLI +2.17% today). A miss or cautious guide would re-test the cyclical bid and force a re-look at the IWM small-cap rotation.
Sector Breakdown — Thursday, June 25
Daily moves reflect end-of-day market data. WTD compares the close with the prior Friday's close.
| Sector | Today | WTD | Notes |
|---|---|---|---|
| XLK (Technology) | +0.83% | -3.59% | Recovery from Tuesday's rout; semis stabilized; AI capex thesis re-anchoring |
| XLY (Consumer Discretionary) | -1.49% | -3.25% | Cyclical bid faded; mega-cap consumer profit-taking returned |
| XLB (Materials) | +1.33% | +0.06% | Steel and packaging names led on cyclical rotation; oil rebound tailwind |
| QQQ (Nasdaq 100) | +0.81% | -3.25% | Recovery as Tuesday's Asian-led AI rout unwound; mega-cap tech bid |
| XLF (Financials) | -0.50% | -0.12% | Slight lag; lower 10Y compresses absolute yield |
| XLV (Healthcare) | +1.49% | +4.17% | Defensive bid returned; GLP-1 strength and demographic tailwind intact |
| XLP (Consumer Staples) | -0.59% | +0.85% | Defensive rotation faded; risk-on appetite returned post-PCE |
| XLU (Utilities) | +0.68% | +2.27% | Continued leadership; 10Y lower a direct tailwind to duration |
| XLE (Energy) | +0.97% | +0.58% | Rebounded on oil's bounce |
| IWM (Russell 2000 ETF) | +0.75% | +1.06% | Small caps continued to lead; cyclical bid intact |
| XLI (Industrials) | +2.17% | +1.77% | Best major sector; data-centre capex re-bid |
| XLC (Communication Services) | -0.90% | -3.54% | Mega-cap media lagged; AI-capex scrutiny continues |
| XLRE (Real Estate) | +0.18% | +1.66% | Slight bid; lower 10Y a modest tailwind |
Note: WTD measured from Monday June 22 close (the week's first trading day; Friday June 19 was the Juneteenth holiday).
Tech recovered the rout — but the rotation, not the rally, is the read. XLK closed at $184.57 (+0.83% on the day, -3.59% WTD), QQQ at $716.38 (+0.81% on the day, -3.25% WTD).
Week-to-Date
SPX is -1.54% WTD (Monday June 22 close 7,472.79 → Thursday June 25 close 7,357.49). The week's pattern: Monday gave back -0.37% on mega-cap profit-taking, Tuesday's Asian-led tech rout took -1.44%, Wednesday stabilized (-0.10%), and Thursday absorbed the hot Core PCE print (-0.01%). The combined WTD effect: tech lagged (XLK -3.59%, QQQ -3.25%, XLC -3.54%), defensives and cyclicals led (XLV +4.17%, XLU +2.27%, XLI +1.77%, XLP +0.85%). Friday's FedEx earnings and June quarter-end rebalancing flows are the dominant near-term catalysts.
Week Ahead
Friday June 26 — Quarter-End. Goods Trade Balance Adv (consensus -$84.0B vs prior -$85.2B); Retail Inventories Ex Auto (consensus +0.6% vs prior +0.1%); Wholesale Inventories (consensus +0.5% vs prior +0.3%); Chicago PMI (consensus 48.0 vs prior 47.0); Michigan Consumer Sentiment final (consensus 73.5 vs prior 72.5); Jackson Hole Economic Symposium registration opens. Quarter-end rebalancing flows are the dominant non-data catalyst. Pension funds, endowments, and the Treasury's SOMA rebalancing typically generate +5-15 bp of equity buying and a flattening of the curve into the close. The FedEx earnings call (Thursday after close) is the structural read on global trade and industrial demand. A clean beat with raised FY guidance would confirm the XLI +4.76% WTD rotation. A miss or cautious guide would re-test the cyclical bid.
Earnings calendar (light week): McCormick (MKC, Tuesday premarket) — consumer-staples read on price elasticity. Accenture (ACN, Thursday premarket) — enterprise IT services and AI consulting demand. FedEx (FDX, Wednesday after close) — already reported by tomorrow's open, will set the tape for Friday's industrial rotation.
Iran Buergenstock technical talks continue all week. Any headline — particularly a confirmed 60-day extension or major new commitment — would move oil and energy equities.
Targets
Targets unchanged from the June 22 weekly: 1-month 7,500 (met on Thursday June 18 close at 7,500.58; current price is -1.90% below target), 3-month 7,600 (under review), year-end 2026 7,800 (under review pending Friday's FedEx read, Q2 preannouncement cycle, and Jackson Hole Economic Symposium July 9-11 preview). The 1-month target is above current; a re-test of 7,500 by month-end requires a soft Michigan Sentiment Friday, a clean FedEx beat, and a Micron-anchored AI-capex stabilization. A hot Michigan Sentiment or a FedEx miss forces a re-test of the 7,330 today's intraday low and risks a 7,265 re-test of the June 9–10 CPI-scare lows.
Bottom Line
Bottom line: SPX at 7,357 (-0.01% today, -1.54% WTD) absorbed the hot Core PCE print (+0.3% MoM, 3.4% YoY — 3-year high) without breaking. The bond market rejected the Warsh hike narrative (10Y -1 bp to 4.39%), VIX rose only marginally (+1.4% to 18.89), and the equity rotation shifted back into cyclicals (XLI +2.17%, XLV +1.49%, XLB +1.33%) and out of defensives (XLY -1.49%, XLP -0.59%). The desk's preference is cyclicals (industrials, materials, rate-sensitive financials), AI infrastructure with a clean Q2 preannouncement track, and money-center financials over high-multiple tech and leveraged REITs until Friday's FedEx and Michigan Sentiment clear. The structural uptrend remains intact; the path to new highs requires the soft data and clean earnings flow to confirm.
Disclaimer: This research is for informational purposes only and does not constitute investment advice. Options trading involves substantial risk of loss. Past performance is not indicative of future results.