Why Markets Keep Falling This Week (And What Happens Tomorrow)
The US stock market has had one of its worst weeks in months.
Since June 4, the S&P 500 is down roughly 4%. The Nasdaq has lost nearly 6%. Tech stocks that were at all-time highs two weeks ago have pulled back sharply. Investors who had been riding a nine-week winning streak are now watching their portfolios decline for the fourth consecutive day.
What’s actually going on? And what should you do about it?
The Week in Review — What Happened and When
June 4 — Broadcom’s earnings trigger the first crack. Broadcom reported extraordinary AI chip revenue — up 143% year over year — but its software segment missed estimates and its AI guidance for next quarter came in slightly below the most aggressive analyst models. The stock fell 12%. Semiconductor stocks broadly declined.
June 5 — The jobs report shock. The May employment report showed 172,000 jobs added — nearly double the 88,000 economists expected. Strong employment is normally good news. But in the current market context, it meant one thing: the Federal Reserve is less likely to cut interest rates. Bond yields surged. Tech stocks, which are most sensitive to interest rate expectations, led the selloff. The Nasdaq lost 4.18% — its worst day since April 2025.
June 9 — Iran, Apple, and continued selling. Over the weekend, Israel and Iran exchanged fire, raising geopolitical risk. The US prepared fresh strikes on Iran. Oil prices jumped on the news, then pulled back as both sides indicated the exchange was concluded. Apple’s stock fell 3% after its WWDC AI announcements disappointed some investors and the company confirmed its new AI Siri would not launch in the EU due to regulatory constraints. The Nasdaq fell another 2%.
June 10 (today) — CPI anxiety. Markets are waiting. Tomorrow morning, the Bureau of Labor Statistics releases the May Consumer Price Index — the most closely watched inflation report. Investors are holding back, unwilling to take large positions before seeing whether inflation is accelerating, decelerating, or staying flat. The S&P 500 and Nasdaq fell approximately 1-2% as trading was cautious.
What CPI Is and Why It Matters So Much Right Now
The Consumer Price Index measures how much prices have changed for a basket of goods and services that a typical American household buys — food, housing, transportation, healthcare, clothing, and more.
When CPI rises faster than expected, it signals that inflation is accelerating. When it comes in lower than expected, it signals that inflation is cooling. The Federal Reserve uses this data, among other indicators, to decide whether to raise, lower, or hold interest rates.
Right now, the CPI report matters more than usual for one specific reason: the strong jobs report of June 5 raised fears that the Fed might need to raise interest rates rather than cut them. A hot CPI tomorrow would confirm those fears. A cool CPI would ease them.
The stakes: if CPI comes in above expectations, expect another bad day for stocks — particularly technology. If CPI comes in below expectations, expect a significant relief rally as investors price in a more accommodative Fed.
The Interest Rate Sensitivity Problem for Tech Stocks
The core reason technology stocks have been disproportionately affected by this week’s selloff is their sensitivity to interest rates.
I covered this in detail in Good News Crashed the Market 4%, but the short version: technology and growth stocks are valued partly on their future earnings — what they’ll earn years from now. When interest rates rise, those future earnings are worth less in today’s dollars. This mathematical relationship between interest rates and valuations is most pronounced for companies whose value is most dependent on distant future earnings.
NVIDIA, AMD, Apple, Microsoft, and other large technology companies that have powered the S&P 500 to record highs are all high-multiple stocks — meaning investors are paying a significant premium above current earnings for the expectation of strong future growth. When interest rate fears rise, those premiums compress.
This is why a jobs report, an inflation reading, or a Federal Reserve statement can move technology stocks more than news directly about the technology itself.
Is This a Correction or the Beginning of Something Worse?
The honest answer: nobody knows. But the historical context is useful.
A correction — typically defined as a 10% decline from a recent high — is a normal part of market cycles. The S&P 500 averages roughly one correction per year. The 4% decline this week, while painful, doesn’t yet constitute a correction from recent highs given the strong year-to-date performance.
The factors that would make this worse than a typical correction: if CPI tomorrow shows inflation reaccelerating, if the Fed signals rate hikes rather than cuts at next week’s meeting, or if the geopolitical situation with Iran escalates significantly. Any of these could extend the selloff.
The factors that would make this a buying opportunity: a cool CPI reading tomorrow, any sign from the Fed that rate cuts remain on the table for later in the year, or a stabilization in geopolitics. These would likely trigger a significant relief rally in technology stocks.
The most honest framing: this week’s decline is a recalibration of expectations, not evidence that something is fundamentally broken. The AI buildout continues. Corporate earnings remain strong. The economy, despite the market’s concerns about it running too hot, is actually in good shape. The selloff reflects uncertainty about the path of interest rates, not deterioration in the underlying economic or business fundamentals.
What to Watch Tomorrow
The May CPI report releases at 8:30 AM Eastern time on June 11.
The consensus expectation is for headline CPI to show approximately 2.3% year-over-year inflation — slightly below April’s reading. Core CPI (excluding food and energy, which are more volatile) is expected at approximately 2.8% year-over-year.
If the actual numbers come in at or below these expectations: expect a strong market open, particularly in technology stocks, as rate cut hopes revive.
If the actual numbers come in above these expectations: expect continued selling, particularly in technology and interest-rate-sensitive sectors.
The World Cup starts June 11 in the US — which means some of the strong May jobs numbers were likely driven by World Cup preparation employment that won’t repeat. This could actually support a lower CPI reading if World Cup-related spending hasn’t yet shown up in price data.
What Should Long-Term Investors Do?
The same thing they always do: nothing dramatic.
The temptation during market selloffs is to do something — sell before it gets worse, move to cash, wait for a better entry point. The historical evidence on this approach is clear and consistent: investors who try to time the market underperform investors who stay invested through volatility.
A week of 4-6% declines in technology stocks is uncomfortable. It’s not unusual. It’s not the beginning of a financial crisis. It’s the market adjusting to new information about interest rates, inflation, and valuations.
If you have cash you were planning to invest anyway, a week of declines might actually be a better entry point than the record highs of two weeks ago. If you’re fully invested and watching your balance decline, the appropriate response is almost certainly to do nothing and let the thesis play out.
The compounding works when you stay invested. It doesn’t work when you sell at the bottom and buy back at the top.
My Personal Take
This has been an uncomfortable week to watch markets. My portfolio is down from its recent highs. The news flow has been relentlessly negative — jobs too strong, inflation fears, Iran tensions, AI stock corrections, Apple disappointing.
And yet: I’m not changing anything. The companies I’m invested in through index funds are still the same companies. NVIDIA is still building the chips that power AI. Broadcom is still connecting AI data centers. Apple is still selling hundreds of millions of iPhones. The businesses haven’t changed because the stock prices fell.
What changed is the market’s expectation about interest rates. That’s real and worth monitoring. But it’s not the same as a change in the fundamental value of the businesses underlying the stocks.
Next week’s Federal Reserve meeting will be more informative than this week’s selloff. The CPI tomorrow will be more informative than today’s cautious trading. I’m watching, not acting.
That’s the plan for now.
Related: Why Good News Crashed the Market 4% covers the jobs report shock that started this week’s selloff. And How Interest Rates Affect the Stock Market explains the Fed rate mechanism that’s driving the current volatility.