PCE “Cools,” Wall Street Remains Held Back by Oil
US stocks moved relatively flat on Thursday (May 28th) following the release of slightly lower-than-expected monthly PCE inflation for April, helping to ease concerns about persistent inflation—despite a rebound in oil prices. The S&P 500 fell 0.1%, the Nasdaq fell 0.2%, and the Dow Jones Industrial Average fell 192 points, or 0.4%.
PCE data showed a 0.4% increase (MoM) with inflation at 3.8% (YoY), according to the US Department of Commerce. Economists had forecast 0.5% (MoM) and 3.8% (YoY). The lower monthly readings signaled price pressures are easing, but the annual rate remains well above the Fed's 2% inflation target, keeping the "higher for longer" narrative intact.
On the energy front, oil rebounded, adding another layer of uncertainty to the market. WTI rose about 2% to hit US$90 per barrel, while Brent rose nearly 2% to hit US$96. Oil prices rallied amid reports of renewed escalation, after the IRGC announced it was targeting a US airbase and the US military reportedly carried out new attacks in Iran.
In individual stocks, Snowflake surged 38% in pre-market trading after providing stronger-than-expected fiscal second-quarter guidance and posting solid first-quarter results. The company also announced plans to spend $6 billion on Amazon Web Services over five years, reinforcing the narrative of data and cloud infrastructure spending.
The market is also still digesting mixed signals regarding Hormuz. On Wednesday, a drop in oil briefly helped the Dow reach a record after US Secretary of State Marco Rubio said talks with Iran were showing progress and diplomacy would be given a chance. However, President Donald Trump has insisted he will not allow Iran to control the Strait of Hormuz. The White House also denied an Iranian state TV report about a deal that could restore commercial flows within a month, calling it a "complete fabrication."
For the coming session, market attention remains divided between two main channels: whether a cooler PCE is enough to curb the Fed's hawkish stance, and whether oil volatility due to the Iran-Hormuz situation will again raise the risk of energy inflation, which could pressure the scope for policy easing.
Source: Newsmaker.id
