The Fed Split 9-9. The Market Split Too. Here's How to Play Both Sides.
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The Three-Way Split • Before the Bell
The Fed Is Split 9-9. The Dow Fell 577. The Nasdaq Rose.
Half the Fed wants to hike. Iran struck 85 U.S. bases. Oil closed above $78. And the Nasdaq went green. Two trades are running at once. Your portfolio needs to hold both.
Thursday, July 9, 2026 • S&P futures −0.82% • KOSPI −5.35% • Brent $77
Key Idea
The Fed minutes landed at 2 PM yesterday. Nine officials project at least one rate hike in 2026. Nine project a hold or a cut. A perfect split. A few wanted to hike immediately in June. Warsh withheld his own projection entirely. Then Iran struck 85 U.S. military sites overnight. The Dow fell 577 points. And the Nasdaq rose 0.2%. Broadcom gained 4.8%. Nvidia gained 3.6%. Same session. The macro trade and the AI trade are no longer moving together. If your portfolio assumes they will, today is the day to fix that.
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To make sure these editions land in your primary inbox instead of the promotions tab, please reply to this email with any word, or drag it into your Primary tab if you use Gmail. That one step keeps us connected.
Thank you for your patience. We are glad to be back, and we will keep earning your open every single morning.
What the Minutes Revealed
Warsh called it a “family fight.” The minutes showed the family is split down the middle.
Nine of 18 officials who submitted dot projections see at least one hike this year. Six of those nine see two or more. The other nine see rates steady or lower. Warsh submitted nothing. He is the first Fed chair to withhold a projection since the dot plot launched in 2012.
A few participants argued for raising rates at the June meeting itself. They were overruled, but their case is now on the record. The committee voted unanimously to hold at 3.50–3.75%. The unanimity masked the depth of the divide.
Here is the line that matters most. “Almost all” participants said that if inflation stays elevated, “some policy firming would likely be warranted.” That is Fed language for: we will hike if the data forces us. Oil at $78 is data. Core PCE was revised up to 3.6% for 2026. GDP was revised down to 2.2%. Slower growth. Stickier prices. The stagflation word is getting closer to the conversation.
Nine of 18 officials who submitted dot projections see at least one hike this year. Six of those nine see two or more. The other nine see rates steady or lower. Warsh submitted nothing. He is the first Fed chair to withhold a projection since the dot plot launched in 2012.
A few participants argued for raising rates at the June meeting itself. They were overruled, but their case is now on the record. The committee voted unanimously to hold at 3.50–3.75%. The unanimity masked the depth of the divide.
Here is the line that matters most. “Almost all” participants said that if inflation stays elevated, “some policy firming would likely be warranted.” That is Fed language for: we will hike if the data forces us. Oil at $78 is data. Core PCE was revised up to 3.6% for 2026. GDP was revised down to 2.2%. Slower growth. Stickier prices. The stagflation word is getting closer to the conversation.
The Dow-Nasdaq Split Widened Again
The Dow closed at 52,348. Down 577 points. Down 1.09%. American Express fell 3.8%. Boeing fell 3%. Sherwin-Williams dropped 3.5%. Airlines cratered. American Airlines lost 4%. United lost 2.5%. JPMorgan fell 2.5%. Visa dropped 1.3%. Every rate-sensitive, oil-sensitive, consumer-facing stock got sold.
The Nasdaq rose 0.2%.
Think about that for a second. The index that tracks banks, industrials, and consumer brands fell 577 points. The index that tracks AI, chips, and software went green. On a day when Iran struck 85 U.S. bases and the Fed revealed a split committee.
The reason has a name. Broadcom gained 4.8% after expanding its component agreement with Apple. Nvidia rose 3.6% on reports that Chinese firms plan to increase purchases of H200 chips. Alibaba surged 11.6%. Arista Networks gained 7%. The AI buildout does not need a rate cut. It needs demand. Yesterday, demand showed up from Cupertino and Beijing on the same afternoon.
The Nasdaq rose 0.2%.
Think about that for a second. The index that tracks banks, industrials, and consumer brands fell 577 points. The index that tracks AI, chips, and software went green. On a day when Iran struck 85 U.S. bases and the Fed revealed a split committee.
The reason has a name. Broadcom gained 4.8% after expanding its component agreement with Apple. Nvidia rose 3.6% on reports that Chinese firms plan to increase purchases of H200 chips. Alibaba surged 11.6%. Arista Networks gained 7%. The AI buildout does not need a rate cut. It needs demand. Yesterday, demand showed up from Cupertino and Beijing on the same afternoon.
What Overnight Made Worse
After the bell, the U.S. launched another round of strikes on Iran. Trump told NATO: “Let’s just finish the job.” He said he is “number one on their kill list” and does not care. Iran had already retaliated by striking 85 American military sites in Bahrain and Kuwait.
This morning, futures are down across every market. S&P 500 futures are off 0.82%. South Korea’s KOSPI fell 5.35%. Japan’s Nikkei dropped 2.11%. Europe’s Stoxx 600 is down 1.69%. Brent crude is at $77 after settling above $78 yesterday.
The IMF released new forecasts overnight. Oil prices are expected to rise 32% in 2026. Global consumer prices will increase 4.7%, up from 4.1% in 2025. That assumes the Strait of Hormuz reopens later this month. If it does not, those numbers go higher.
SpaceX closed at $149.47 on its second day in the Nasdaq-100. Still above the $135 IPO price but down from $164 on Monday. Three analysts initiated coverage overnight: JPMorgan, Deutsche Bank, and Morgan Stanley all rated it a buy. JPMorgan set a December 2027 target of $225.
This morning, futures are down across every market. S&P 500 futures are off 0.82%. South Korea’s KOSPI fell 5.35%. Japan’s Nikkei dropped 2.11%. Europe’s Stoxx 600 is down 1.69%. Brent crude is at $77 after settling above $78 yesterday.
The IMF released new forecasts overnight. Oil prices are expected to rise 32% in 2026. Global consumer prices will increase 4.7%, up from 4.1% in 2025. That assumes the Strait of Hormuz reopens later this month. If it does not, those numbers go higher.
SpaceX closed at $149.47 on its second day in the Nasdaq-100. Still above the $135 IPO price but down from $164 on Monday. Three analysts initiated coverage overnight: JPMorgan, Deutsche Bank, and Morgan Stanley all rated it a buy. JPMorgan set a December 2027 target of $225.
Two Trades, One Portfolio
Since Thursday July 2, the Dow has fallen 708 points. The Nasdaq has dropped 170. But inside the Nasdaq, Broadcom gained 4.8%, Nvidia gained 3.6%, and Alibaba surged 11.6% in a single session. The macro trade is selling banks, airlines, and consumer cyclicals on oil and rate risk. The AI trade is buying chips and compute on demand confirmation. They ran in opposite directions on the same day, on the same data. If you own QQQ and DIA in the same portfolio, one gained and one lost on Wednesday. The second half requires you to hold both positions and understand which one each headline affects.
Three Scenarios for Today
Base
Markets open down 0.5–1%. Oil holds $75–78. Energy names extend gains: XLE, Chevron, Exxon, ConocoPhillips. Chips hold Wednesday’s bounce. Broadcom and Nvidia stay bid. The Dow tests 52,000. The S&P 500 trades 7,400–7,500. Defense stocks rally: LMT, RTX, NOC gain 2–4%. The 10-year yield holds 4.50–4.60%. September hike odds drift toward 55%. CPI on July 14 remains the next binary event. Weekly jobless claims at 8:30 this morning set the tone.
Upside
Iran signals de-escalation overnight. The Strait stays open. Oil drops back toward $73–74. Jobless claims come in flat. The market reads the Fed split as balanced, not hawkish. The Nasdaq extends into positive territory for the week. Broadcom and Nvidia lead chips higher. The S&P 500 recovers to 7,500. Defense and energy hold gains regardless. SPCX stabilizes near $150 as analyst initiations provide a floor.
Risk
Overnight strikes escalate further. The Strait closes to traffic. Oil breaks above $80. Brent targets $85 by Friday. The 10-year pushes past 4.65%. September hike becomes the base case. Even chips reverse as the macro overwhelms the demand story. The S&P 500 drops 1.5–2.5% in a single session. KOSPI’s 5.35% decline this morning spreads to European and U.S. markets. A 5–7% correction from the July 6 high becomes the consensus by Monday.
Our View
We told you yesterday that the CPI calculus had flipped. The Fed minutes confirmed it from the inside. Nine officials want to hike. Core PCE is now forecast at 3.6%. Oil gained $11 in a week. The rate-cut thesis that powered the Dow to five consecutive records is dead for now.
But here is what the Dow-only view misses. The Nasdaq rose on the worst geopolitical day since March. Broadcom signed a component deal with Apple. Nvidia got a demand signal from China. The AI buildout is not funded by rate cuts. It is funded by corporate capex that was committed years ago. That spending does not stop when oil goes to $78. It stops when demand disappears. Demand did not disappear yesterday. It showed up from two continents.
Your portfolio needs two positions now. The macro hedge: energy, defense, cash. XLE, LMT, RTX. The growth position: compute deployers. Broadcom, Nvidia, Meta. Do not pick one trade. Hold both. The second half is not a single story. It is a split screen.
CPI on July 14. Earnings start the week after. Position for both.
But here is what the Dow-only view misses. The Nasdaq rose on the worst geopolitical day since March. Broadcom signed a component deal with Apple. Nvidia got a demand signal from China. The AI buildout is not funded by rate cuts. It is funded by corporate capex that was committed years ago. That spending does not stop when oil goes to $78. It stops when demand disappears. Demand did not disappear yesterday. It showed up from two continents.
Your portfolio needs two positions now. The macro hedge: energy, defense, cash. XLE, LMT, RTX. The growth position: compute deployers. Broadcom, Nvidia, Meta. Do not pick one trade. Hold both. The second half is not a single story. It is a split screen.
CPI on July 14. Earnings start the week after. Position for both.