📊 Market Overview
The tech sector led markets higher last week, with the broader index gaining roughly 230 basis points (hundredths of a percent) by Friday’s close on strong momentum in AI-related stocks. The biggest driver was continued massive fund inflows into technology — about $126 billion flowed into global equity funds in the week ending June 17, with tech and industrials leading the way. The one number to watch this week: Thursday’s PCE inflation data for May, which is the Federal Reserve’s preferred measure of inflation and could determine whether we get three rate hikes this year.
📊 Market Snapshot
Bank of America now expects three interest rate hikes this year — if Thursday’s inflation reading comes in hot, that forecast gets louder and your bond and stock prices could feel the squeeze.
📈 The Big Picture
Inflation is back in the spotlight. Consumer prices in May posted their highest increase since April 2023, and producer prices rose at the fastest pace since November 2022. Bank of America (BofA) just flipped its forecast and now expects the Fed to raise rates by 0.25% each in September, October, and December — pushing rates to 4.25%–4.50% by year-end. BofA doesn’t see a rate cut until 2028. Fed Chair Kevin Warsh has stressed that price stability is the top priority, even if it means hurting employment.
Meanwhile, there’s a bright spot at the gas pump: national average gas prices fell below $4.00 per gallon to $3.99, thanks to a deal between Washington and Tehran that dropped Brent crude oil prices by about 13%. For your portfolio, the tension is clear — cheaper gas helps consumers spend, but sticky inflation elsewhere could mean higher borrowing costs for companies and homeowners alike.
📖 Term of the Day
PCE (Personal Consumption Expenditures): A measure of how much prices are rising across the economy based on what people actually buy — it’s the Federal Reserve’s favorite inflation gauge because it’s broader than the more well-known CPI.
Why you care today: Thursday’s PCE report for May could confirm that inflation is reaccelerating, which would support BofA’s call for three rate hikes and potentially rattle both stock and bond markets.
💼 Watchlist: 3 Stocks to Know Today
Credo Technology (CRDO) — “The AI Dark Horse”
Evercore ISI just started covering Credo with an Outperform rating and a $325 price target, saying the company could expand its addressable market 10 to 20 times through its roadmap in optical connectivity for AI data centers. Credo expects annual earnings growth of 70% compounded over three years — 40% above what the rest of the market expects.
Apple (AAPL) — “The Downgrade”
KGI Securities downgraded Apple from Outperform to Hold and set a $315 price target. For beginners, a downgrade to “Hold” means the analyst thinks the stock is fairly priced right now and doesn’t see much upside from here.
Micron Technology (MU) — “The Earnings Test”
Micron reports earnings Wednesday and analysts expect strong memory chip demand driven by AI, with UBS raising its price target to $1,500 — a 31% premium over the last closing price. But beware: Micron’s stock has fallen the day after earnings in 5 of its last 6 reports, so a beat doesn’t guarantee a rally.
💬 Esther’s Take
