Stock Market Today: SPY, QQQ Slip as Rate Cut Odds Sink to 0%; Trump Calls Off Planned Attack on Iran

Rate-cut odds plunged to 0% by year-end from 3.7% a week ago and 37.6% a month ago, while the 10-year yield rose to 4.6% and the 30-year to 5.14%, pressuring equities. The move was amplified by elevated oil prices, rising inflation fears, and Morgan Stanley's warning that bond selling could trigger the first meaningful equity correction since late March. Geopolitical tensions eased slightly after Trump delayed a planned Iran attack, while Nvidia, AMD, Intel, and Costco saw stock-specific moves on analyst target changes and a dividend hike.

Analysis

The market is starting to price a regime shift from disinflation to renewed duration pressure, and that matters more for equities than the headline “no cut” narrative. A move in real yields this fast tends to compress long-duration multiple leaders first, then spill into the broader index as systematic de-risking and CTA selling kick in; that makes this less about one bad tape day and more about an air-pocket risk over the next 1-3 weeks if yields keep grinding higher.

For semis, the near-term winner/loser split is subtle: AI capex is still intact, but valuation support is getting more fragile. NVIDIA is the highest beta to both earnings enthusiasm and discount-rate changes, while AMD/INTC can actually be relatively more insulated if the market rotates toward “AI at a cheaper multiple” rather than pure growth scarcity; however, that only helps if the sector holds up on results. If Nvidia disappoints even modestly, the reaction could be disproportionate because the street is carrying a lot of embedded optimism into an already higher-rate backdrop.

The more underappreciated implication is for retailers with recurring cash generation like COST: if rates stay elevated, investors will pay up for defensives with visible same-store durability and shareholder returns. Dividend growth becomes a real factor again in a 4.5%+ 10-year world, which should support COST relative to high-duration growth as long as consumer demand remains stable. Meanwhile, the geopolitical premium in oil is an inflation tax on the equity risk premium; even without a direct energy trade in this basket, it reinforces the bond selloff and keeps pressure on cyclically sensitive valuations.

The consensus may be too focused on “no cuts” as a bear signal and miss that the bigger issue is policy credibility under sticky inflation. If markets start to believe the next Fed chair is more dovish but lacks independence, the term premium could rise further, paradoxically tightening financial conditions before any actual policy move. That is the setup for a short, sharp equity correction rather than a slow grind lower.

Key Decisions for Investors

• Short NVDA into Wednesday earnings via put spreads or a small cash short; reward/risk is favorable because a modest miss or guide-down can trigger multiple compression in a higher-rate tape.
• Pair long COST / short QQQ for 2-4 weeks; defensives with capital return should outperform duration-heavy growth if yields keep rising, with downside limited if the market stabilizes.
• Reduce gross exposure to high-multiple AI beneficiaries ahead of the next 5-10 trading sessions; treat any post-earnings bounce in semis as a chance to sell strength until rates re-anchor.
• If 10-year yields hold above 4.5%, buy short-dated S&P put spreads as a tactical hedge; the setup favors a fast 2-4% drawdown over a slow drift.
• For more convex exposure, consider a pair of long COST vs short NVDA/QQQ rather than outright index shorts; that isolates the duration trade while keeping macro beta manageable.