The S&P 500 had a rough Tuesday, slipping 0.45% to close at 7,503.85 as investors rotated out of AI stocks and geopolitical tensions in the Middle East flared up again. And if you ask the crowd on Polymarket, Wednesday isn't looking much better.
The July 8 Polymarket contract on whether the S&P 500 would open higher on Wednesday implied just a 12% probability as of early Wednesday. That's a dramatic drop from earlier in the week, when chances were above 50%. The contract essentially says: traders are overwhelmingly betting on another weak open.
Why That Number Matters
Markets are juggling two major risks heading into Wednesday's session: renewed geopolitical tensions in the Middle East and uncertainty over the Federal Reserve's policy path.
Investors will scrutinize minutes from the Fed's June meeting for more detail on Chairman Kevin Warsh's first policy meeting after officials left interest rates unchanged but signaled additional rate hikes could be warranted if inflation remains persistent.
At the same time, oil prices surged after the U.S. launched fresh strikes on Iran following attacks on commercial vessels in the Strait of Hormuz.
The Bear Case
Artificial intelligence-linked stocks remain under pressure after another round of selling hit semiconductor shares. The VanEck Semiconductor ETF (SMH) fell more than 3% on Tuesday.
Geopolitical risks have also intensified. Oil prices climbed more than 5% after President Donald Trump said on Wednesday he considers the U.S.-Iran ceasefire to be over.
Speaking alongside NATO Secretary General Mark Rutte at the alliance's summit in Ankara on Wednesday, Trump said: "To me, I think it's over. I don't want to deal with them anymore … as far as I'm concerned, it's over."
The jump in crude prices has renewed concerns that inflation could remain elevated and keep the Federal Reserve on a hawkish path.
S&P 500 futures were down 0.97% early Wednesday.
How The Previous Bet Played Out: The S&P 500 opened Tuesday at 7,516.63, below Monday's close of 7,537.43, meaning the July 7 Polymarket bet resolved "Down." The contract recorded approximately $107,040 in traded volume before settling.
