Nasdaq wavers as PCE holds at 4.1%, Apple slides and Micron surges

The Nasdaq Composite wavered Thursday after the Fed's preferred inflation gauge met forecasts, while Apple slid and Micron surged on diverging earnings outlooks.

"PCE is well above target, but it's looking at an older reality that has improved dramatically since May," David Russell, global head of market strategy at TradeStation, said. "This has little near-term impact on Fed policy, and may let policymakers remain on the sidelines despite the harder rhetoric. Inflation is high, but it might not go much higher."

The core PCE price index rose 0.3% month over month in May, matching the consensus estimate and the prior month's pace, the Bureau of Economic Analysis reported. On a year-over-year basis, core PCE accelerated to 3.4% from 3.3%. The headline PCE price index, which includes food and energy, climbed 0.4% month over month and 4.1% from a year earlier, also in line with forecasts. Personal income jumped 0.7%, topping the 0.4% consensus estimate, while personal outlays rose 0.7%, exceeding the 0.5% forecast. The personal saving rate held at 3.0%, down from 4.6% a year earlier.

The data keeps the Fed on hold. At his first meeting as chair last week, Kevin Warsh said the committee "will deliver price stability," signaling no near-term rate cuts. RSM US Chief Economist Joseph Brusuelas said a rate hike is "far more likely than a rate cut" in the near term, though he expects headline inflation to retreat quickly as oil prices fall from their May peak. "Thus, the 0.4% month-over-month increase and 4.1% advance in inflation from one year ago is stale," Brusuelas said in an X post, adding that core inflation won't cool as easily given upward pressure from the producer price index, the AI infrastructure buildout and rising defense spending.

The diverging moves in two of the market's most-watched tech names highlighted the crosscurrents shaping the Nasdaq. Apple shares declined as the company faces ongoing demand concerns in China, where UBS said iPhone "sell-in" fell 19% year over year. Micron Technology surged after the memory-chip maker reported quarterly results that analysts at Stifel called "exceptional," with new supply agreements pointing to sustained pricing power. The contrasting moves reflect a tech sector where AI-driven demand is lifting semiconductor names while consumer-facing hardware faces headwinds.

The U.S. 10-year Treasury yield edged lower as the in-line data reduced some uncertainty around the inflation trajectory, while the dollar index held near recent levels. West Texas Intermediate crude traded around $72 a barrel, down from its May peak, a decline that economists said should help cool headline inflation in coming months. The combination of steady inflation data and falling energy prices presents a mixed picture for equity markets: supportive for valuations in the near term but insufficient to trigger a policy pivot from the Fed.

This article is for informational purposes only and does not constitute investment advice.