Wall Street Braces For PCE Print After Record-Setting Thursday

Introduction#

According to Monexa AI’s closing tape, U.S. equities climbed for a third straight session on Thursday, pushing the S&P 500 to 6,141.01 and within a whisker of a new intraday record. The advance was powered by another broad-based melt-up in large-cap technology, a resurgence in energy shares, and a late-day bid into cyclicals once Washington signalled flexibility on the July 9 tariff deadline. Overnight, traders digested upbeat Asian and European sessions, fresh headlines on a potential extension of U.S.-EU tariff negotiations, and a slate of central-bank sound-bites that kept rate-cut hopes alive ahead of this morning’s Personal Consumption Expenditures (PCE) inflation release.

Market Overview#

Yesterday’s Close Recap#

The Dow Jones Industrial Average logged a 400-point rally, its best single-day point gain in nearly a month, while the NASDAQ Composite eked out a fresh closing high as large-cap chipmakers and cloud infrastructure names extended their June rebound. Volatility measures slipped to six-week lows; the CBOE Volatility Index (VIX) finished at 16.14, underscoring complacency ahead of key macro data.

Investors cited three principal drivers: firmer crude-oil prices that sparked rotation into exploration and midstream plays; a second straight day of upbeat earnings beats from mid-cap industrials; and mounting optimism that today’s PCE print will confirm the disinflationary trend implied by May’s CPI and PPI releases.

Overnight Developments#

Asia kicked off the global risk rally after Shanghai traders cheered headlines suggesting “constructive” progress in U.S.–China trade discussions. The CSI 300 closed up +1.4%, its best session in two weeks. In Europe, the Stoxx 600 added +0.7% by midday after ECB Vice-President Luis de Guindos echoed Wednesday’s Sintra comments, stressing the eurozone is “on track” to meet the 2% inflation goal.

On the policy front, Fed Chair Jerome Powell maintained his data-dependent stance at an Atlanta Fed forum, but traders noted his remark that “the last mile of disinflation is proving less bumpy than feared.” Rate-futures now price roughly 46 bp of cumulative easing this year, up from 42 bp 24 hours earlier.

Macro Analysis#

Economic Indicators to Watch#

The May PCE Price Index (08:30 ET) is the marquee release. Consensus compiled by Bloomberg calls for a headline rise of +0.1% m/m and +2.6% y/y; the core is seen up +0.2% m/m and +2.6% y/y. A print at or below those levels would reinforce the notion that Q2 inflation risks remain contained, emboldening the market’s September cut narrative.

At 10:00 ET, the University of Michigan’s final June Consumer Sentiment revision will offer a real-time pulse on household inflation expectations. Fed voters Austan Goolsbee and John Williams speak after the bell; traders will parse any colour on balance-sheet strategy or long-term neutral-rate estimates.

Global & Geopolitical Factors#

Tariff risk remains a slow-burn variable. The White House hinted that the July 9 deadline for a potential 50% levy on EU imports is “not critical,” soothing fears of an immediate escalation. Meanwhile, reports of bipartisan support for extended rooftop-solar tax credits gave the renewable-energy complex fresh life and appeared to be the catalyst behind the +12.83% surge in ENPH yesterday.

Elsewhere, oil traders are monitoring the Iran backdrop after officials suggested negotiations could reopen on sanctions relief. Brent sits near $87 a barrel, up almost +9% month-to-date, adding a tail-wind to U.S. energy earnings estimates.

Sector Analysis#

Sector Performance Table#

The leadership baton shifted toward Energy, Technology, and Basic Materials. Enphase’s double-digit pop anchored a renewable-plus-oil duality: legacy E&Ps like APA tacked on +3.65%, while midstream operator WMB jumped +3.59% after pricing a $1.5 billion bond offering barely five basis points inside talk—evidence of healthy appetite for balance-sheet expansion.

Technology posted its sixth gain in seven sessions. Server-maker SMCI advanced +5.71% on the heels of a $2.3 billion convertible offering that instantly upsized on hot demand, signalling institutional comfort with growth-capex dilution. ANET and DELL each added more than +4.5% as buyside desks chased anything linked to AI-driven data-center build-outs.

Real Estate lagged sharply, dragged lower by a −9.56% slide in hyperscale REIT EQIX after sell-side chatter about elevated power-rate renegotiations. The move illustrates ongoing duration risk for highly levered REITs in a still-restrictive rate climate.

Company-Specific Insights#

Earnings and Key Movers#

Chipmaker MU delivered the headline of the session, posting adjusted EPS of $1.91 versus the $1.59 whisper and guiding fiscal Q4 revenue to $10.7 billion (±$300 million)—a cool 9% ahead of consensus. Yet shares slipped −0.98% as traders booked profits into a 34% year-to-date run and weighed management’s caution on PC-and-mobile demand. Importantly, management flagged a near-50% sequential jump in High-Bandwidth Memory sales, bolstering the bullish AI narrative.

Industrial tech name AYI smashed projections with a $5.12 EPS print and an 8% revenue surprise, powering the stock +5.81%. Management highlighted double-digit order growth in intelligent-building solutions, hinting at a demand inflection as corporate capex pivots from cost savings to productivity upgrades.

Specialty-chemicals maker FUL rallied +10.78% after lifting full-year guidance on margin expansion. Meanwhile, WBA edged up +0.62% even as EPS fell 40% y/y, signalling the market is already discounting retail-pharmacy headwinds ahead of its $10 billion take-private.

In consumer staples, MKC overcame tariff worries, gaining +5.34% on flat but better-than-feared adjusted EPS. Management said it has “line of sight” to fully mitigating tariff-driven agricultural-input inflation in 2025, a data point reinforcing margin-defensive pricing power in essential categories.

Among cyclicals, cruise operator RCL climbed +4.06% as booking curves extended into late 2026, while ABNB added +3.12% on reports of record summer occupancy rates. Conversely, TSLA slipped −0.54% amid chatter of further EV-subsidy cuts in key European markets.

Unusual Option Activity and Flows#

Options desks flagged heavy call buying in UBER after The New York Times revealed founder Travis Kalanick is courting investors—potentially including Uber itself—to acquire Pony.ai’s U.S. unit. Thirty-day implied volatility popped six points yet remains below the 70th percentile, implying room for further premium expansion should a deal crystalise.

Separately, block trades in July 130 calls on DELL printed at three times open interest, suggesting speculation that the company’s Infrastructure Solutions Group will snag incremental AI-server share when June quarter data rolls out.

Extended Analysis#

Cross-Asset Signals#

Treasuries were steady overnight with the 10-year note anchoring near 4.28%, down almost 20 bp from the mid-June highs. The benign rate backdrop is cushioning equity valuations in duration-heavy corners such as cloud software and semi-capital equipment.

In commodities, copper’s +6.85% surge in FCX shares mirrored LME spot’s breakout above $9,700/t on Chinese restocking chatter. The move reinforces a constructive stance toward Basic Materials, particularly miners with low incremental capacity costs.

Valuation Check-Up#

The forward S&P 500 P/E stands just above 21.5×, roughly one turn richer than the five-year average but still 80 bp inside the early-2024 peak. Markets are effectively pricing two rate cuts by December and mid-teens EPS growth through 2026. Any upside surprise in today’s PCE figure or hawkish Fed language could compress multiples quickest in profitless tech; however, elevated sector correlations—currently one standard deviation above the 10-year mean, per SocGen—indicate the broader tape would feel any valuation squeeze.

What Could Change the Narrative#

1. A hotter-than-expected core PCE print above +0.3% m/m would likely nudge September cut expectations off the table and test equity resilience.
2. A breakdown in tariff negotiations could revive stagflation fears, particularly for Consumer Defensive names lacking pricing elasticity.
3. Faster-than-forecast AI data-center capex has the opposite effect—reinforcing the bull case that current multiples understate semiconductor-cycle duration.

Conclusion#

Morning Recap and Outlook#

Futures sit marginally higher heading into the open, extending Thursday’s momentum as traders place their chips on a friendly PCE print and a Powell doctrine that “good things happen slowly; bad things don’t have to happen at all.” Energy leadership, robust semi earnings, and improving breadth point to a still-constructive risk backdrop. Yet with volatility scraping multi-month lows and sector correlations elevated, the bar for a macro disappointment is low.

Investors should keep an eye on
– The 08:30 ET PCE release for confirmation—or refutation—of the disinflation trend.
– Post-data Treasury reaction; a repricing toward 4.35% on the 10-year could stall rate-sensitive groups.
– Guidance commentary from the raft of mid-cap industrial conferences next week, which will either validate or temper the reflationary bid in cyclicals.

Key Takeaways: equities are flirting with records because AI-linked capex and energy demand continue to deliver tangible earnings beats; Real Estate and Consumer Defensive caution remind us that micro dispersion remains high; and today’s PCE and Fed rhetoric form a binary catalyst that could either cement a summer melt-up or prompt a tactical volatility spike. Positioning into the weekend favours maintaining exposure to high-quality AI infrastructure names like MU and cash-rich energy producers, while keeping dry powder should inflation surprise to the upside.