Yesterday was ugly. The Dow dropped 750 points after the Fed made clear it has no plans to rescue a market getting squeezed from every direction: oil above $100, inflation revised up, and Treasury yields that won't stop climbing.

Then Micron dropped one of the greatest earnings beats in recent memory. And the stock fell 5% anyway.

That's the market we're in right now: Good news gets sold. Bad news gets punished. And everyone's waiting on the same handful of data points to tell them which way this breaks.

We'll break down exactly what's happening and what to watch.

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Three things driving the tape right now, and what it takes for each one to break.

Suffice it to say that Micron Technology (MU) just posted one of the best earnings reports in history. The numbers:

But why was MU down 5% pre-market (now only down 2%)? The beat was already priced in, and Q3 guidance of $33.5B spooked some analysts who think Micron is pulling forward demand rather than reflecting a new baseline. And with the 10-year Treasury at 4.25%, investors are trimming winners. Classic sell the news.

Markets are also afraid that MU might be overspending with $25 billion in capital expenditure (CapEx) planned. What matters there is “the cost of money…” In other words, inflation. And high inflation = bad news for Micron’s future cash flows, because each dollar will be worth less. Accordingly, we’ll be watching to see if Friday’s Personal Consumption Expenditures (PCE) inflation data matches the Fed’s number (2.7%) from yesterday. Speaking of:

The Fed held rates at 3.50%-3.75%, no surprise there. The surprise was the tone. PCE was revised up to 2.7%, and GDP up to 2.4%.

Cutting rates into $100+ oil would risk making inflation worse, and Powell knows it. Markets are now pricing zero cuts until October 2027. The real question heading into Friday's PCE print: does Powell start hinting at a "no-landing" scenario where rates don't move at all in 2026?

Brent briefly rose above $111 after fresh attacks on energy infrastructure in Saudi Arabia and Iran (now back to $106). Iran has explicitly said they see no reason to negotiate. Two rumors in energy markets: 1) the US might de-sanction Iranian oil that’s already on the water, and 2) a US-led coalition may attempt to forcibly escort tankers through the Strait as early as next week. A successful escort mission could send oil back toward $80. An escalation would likely send the price far higher. Nobody knows which way it breaks until it breaks.

We’ll keep you updated on all three.

President Trump waived the Jones Act for 60 days to ease domestic energy costs. The move allows foreign-flagged vessels to transport oil, gas, and refined products between US ports, cutting shipping costs as the administration scrambles ahead of midterms.

Macy's beat on Q4 earnings ($1.67 vs. $1.53 expected) and posted positive comps across all nameplates. Bloomingdale's led the charge with 9.9% comp growth, marking its sixth straight quarter of gains. Fiscal 2026 guidance was cautious due to tariff headwinds.

The Bank of Japan is expected to hold rates steady on Thursday as the Middle East conflict muddies the outlook. Markets still see roughly a 60% chance of a hike in April, but surging oil prices complicate matters for the import-reliant economy.

Powell confirmed he'll stay as Fed chair until his successor is confirmed, putting rumors of an early exit to rest.

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Cheers,
Brandon & Blake of Invested Inc