Nasdaq is trying to bounce after its worst session in over a year. Dow futures are pulling lower on fresh war risk.

Overnight was severe. South Korea's KOSPI crashed hard enough to trigger a circuit breaker. Samsung fell double digits at the lows. SoftBank (SFTBY) lost more than seven percent in Tokyo. The Nikkei dropped sharply. Hong Kong and mainland China both sold off. The damage was broad and it started with chips.

Then came the weekend. Iran fired missiles at Israel on Sunday. First strike since the April ceasefire. Israel hit back Monday morning. Oil jumped sharply. The ceasefire is wounded but still standing.

Friday set the stage. The Nasdaq had its worst day since the tariff shock last spring. The chip index posted its steepest single-day drop in over a year. The S&P snapped a nine-week winning streak.

Market Implication

Nasdaq is bouncing. The Dow is pulling back. Tech sees a buying chance. The Dow sees a war. Both can't be right at the same time. CPI Wednesday is the referee. A soft print validates the tech bounce. A hot print validates the Dow's read on what the war and the jobs number actually mean for rates.

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First, the jobs number. May payrolls came in roughly double what the street expected. The labor market is reheating. Yields jumped. The long end broke to cycle highs. Markets began pricing a rate hike by year-end. That flipped the rate story that drove AI names higher for months.

Second, the war. Iran's missiles broke two months of fragile quiet. An Iranian official said a deal with the U.S. is "no longer feasible." Oil spiked. Oil feeds into inflation. Inflation feeds into rates. Rates feed back into the same problem the jobs number created.

Hotter labor data keeps the Fed tight. War-driven oil keeps inflation sticky. Both push yields higher. Both compress the long-duration names that led the rally.

Structural Setup

The long end at cycle highs changes the math. Every AI name priced on future earnings just got more expensive to hold. If CPI on Wednesday confirms what the jobs data implied, the repricing has barely started.

The chip index had its steepest drop since the tariff panic last spring. Broadcom (AVGO) lost nearly a fifth of its value in two days. Marvell (MRVL), Micron (MU), and AMD (AMD) all fell double digits Friday. Nvidia (NVDA) dropped sharply.

Friday's tape told the story before overnight markets confirmed it. Small caps rallied briefly at Friday's open on hot labor data. By the close they were down hard. The rotation lasted less than an hour. What started in US chip names on Thursday finished as a global selloff by Monday morning.

The Dow had hit a record the day before. That record lasted one session. Breadth collapsed. The names that led the market all year became the heaviest weights on the way down.

Sector Read

This selloff reprices AI growth under higher borrowing costs. The fault line from Friday holds into this week. Nvidia is the platform test. If it stabilizes while Broadcom and Marvell keep sliding, the Friday sorting continues. If Nvidia breaks its Friday low, the repricing is broader than the exclusivity thesis. That is the specific tell, not the index level.

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Wednesday brings May CPI. The April print showed inflation at its hottest in years, driven by energy. A hot follow-up would confirm the Fed may need to tighten, not ease.

Thursday evening, SpaceX prices its IPO. This would be the largest public offering in history. It lands into the weakest risk appetite since spring. If the deal prices at the top of its range, capital is still chasing growth. A lower price tells you it pulled back.

OPEC+ met Sunday and approved a fourth output hike since the Strait of Hormuz closed. Supply remains tight. The strait is still choked. Iran just reminded the market why.

Watch Signal

CPI is the binary event. A soft print gives room to call Friday a flush. A hot print puts the Fed in tightening mode. Watch the two-year yield at 8:31 Wednesday morning. That's the first place the answer lands.

Samsung and SK Hynix make up more than a third of the index. The KOSPI more than doubled over the past eighteen months. Almost all of it was memory chips. AI demand turned Seoul into the hottest equity market on earth.

Then it snapped. Foreign investors sold for more than twenty straight sessions. Margin loans hit records. The won fell to crisis-era levels. This morning, forced selling overwhelmed the exchange.

This is the same trade that drove Broadcom, Marvell, and Micron higher. The same crowding. Seoul broke first because it was the most exposed.

The Read

One trade drove the entire KOSPI. When that trade cracked, the selling went mechanical. If Samsung and SK Hynix can't hold their lows this week, the forced unwind continues. And it won't stay in Seoul.

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Economic Data: No notable releases

Earnings: Campbell Soup (CPB), Vail Resorts (MTN) 

Overnight: Nikkei -3.85%, Shanghai Composite -1.70%, FTSE -0.06%, DAX -0.70%

Two numbers this week decide what Friday meant.

CPI on Wednesday tells us whether inflation is gaining speed. Energy drove the last print. Oil is higher now. A hot number means the rate hike moves from risk to base case.

SpaceX prices Thursday evening. A record deal needs record demand. If the book fills at the top, risk appetite survived. If the deal has to cut its price, the market that bought everything a week ago just flinched.

One outcome means Friday was a healthy flush. The other means it found something deeper.

We'll know by Thursday night.