The S&P 500 had a rough Tuesday, slipping 0.26% to close at 7,386.65 after giving up early gains. And if you ask the crowd on Polymarket, Wednesday isn't looking much better. The prediction market's June 10 contract gives the benchmark index just a 22% chance of opening higher — a strongly bearish signal from traders who are betting on more red.

So what's spooking the market? Two big things: Iran and inflation.

Late Tuesday, the U.S. launched what it called "self-defense strikes" against Iran, after accusing Tehran of shooting down a U.S. Army Apache helicopter over the Strait of Hormuz. That's a major escalation in a region that was already on edge. Iran retaliated by targeting U.S. sites in Jordan, Bahrain, and Kuwait, raising fears of a broader conflict that could disrupt global oil supplies. Oil prices reacted accordingly, with West Texas Intermediate crude futures rising about 1% in overnight trading.

Meanwhile, investors are bracing for May's consumer price index report, due Wednesday morning. Economists surveyed by Dow Jones expect annual inflation to accelerate to 4.2%. That would be the first reading above 4% since May 2023 — not exactly the kind of milestone markets want to see. Higher inflation could mean the Federal Reserve stays hawkish, keeping interest rates elevated for longer.

But it's not all doom and gloom. President Donald Trump said Tuesday that a deal with Iran could be reached within "two or three days" that would reopen the Strait of Hormuz, potentially easing energy supply fears. And despite the overall market decline, some sectors actually performed well on Tuesday: materials, consumer discretionary, and real estate stocks all outperformed. That suggests investors are rotating into areas that could benefit if energy prices stabilize and the economy keeps chugging along.

Still, S&P 500 futures were down 0.47% early Wednesday, pointing to a lower open. For context, the previous day's Polymarket bet resolved "Up" — the index opened Tuesday at 7,438.66, above Monday's close of 7,405.73, with about $87,405 in traded volume. But this time, the odds are stacked the other way.

Between the missiles and the CPI, Wednesday's open could be a wild one. Keep an eye on the data — and the headlines.