U.S. stock futures climbed Thursday following blowout earnings from Micron Technology and updated guidance from Qualcomm. Investors are pivoting toward the May Personal Consumption Expenditures (PCE) report, with Dow Jones economists forecasting a 4.1% yearly increase in the Federal Reserve’s preferred inflation gauge.
How will semiconductor earnings shape the tech sector?
The semiconductor industry is showing signs of massive revenue acceleration, driven largely by high-demand hardware. Micron Technology reported fiscal third-quarter results that exceeded analyst expectations, sending its shares up nearly 15% in extended trading on Wednesday.
The scale of Micron’s growth is evident in its revenue guidance. The company expects current-quarter revenue to reach $50 billion, a significant leap from the $11.3 billion reported a year ago. This guidance also sits well above the $43.58 billion previously forecasted by analysts.
Qualcomm is following a similar trajectory. The chipmaker raised its fiscal 2029 non-handset revenue guidance to $40 billion, up from an earlier projection of $22 billion. This surge has triggered a “sympathy” rally across the sector, lifting stocks such as Sandisk, Western Digital, Lam Research, KLA, and Applied Materials.
What inflation data is the Federal Reserve watching?
Traders are bracing for the release of the May Personal Consumption Expenditures (PCE) price index. Because the Federal Reserve uses this specific metric to gauge inflation, the results will likely dictate upcoming interest rate decisions.
Economists polled by Dow Jones expect the headline index to rise 0.5% on a monthly basis. This would be a slight increase from the 0.4% gain seen in April. On a yearly basis, the index is expected to hit 4.1%, which is higher than April’s 3.8% rise.
Core PCE, which excludes volatile food and energy prices, is also expected to trend upward. Analysts anticipate a 0.3% month-over-month increase and a 3.4% year-over-year increase. Both figures are higher than April’s core readings of 0.2% monthly and 3.3% annually.
Inflation Comparison: April vs. May Forecasts
| Metric | April (Actual) | May (Expected) |
|---|---|---|
| Headline YoY Inflation | 3.8% | 4.1% |
| Core PCE YoY Inflation | 3.3% | 3.4% |
Is a market rotation from technology to other sectors occurring?
While semiconductor stocks are surging, some analysts suggest the broader market is shifting its focus. Ryan Detrick, chief market strategist at Carson Group, told CNBC’s “The Exchange” that recent movement out of technology stocks may actually be a constructive sign for the year.
“In other words, breadth expanded,” Detrick said. He noted that while technology may see lower prices in certain segments, the capital is rotating into sectors like industrials and financials. He also mentioned the possibility of a “June swoon,” suggesting that a seasonal slowdown might be occurring.
What political spending could impact the economy?
The economic landscape is also being shaped by federal fiscal requests. The White House has asked Congress for $87.6 billion in supplemental spending. According to a letter from Office of Management and Budget Director Russell Vought to House Speaker Mike Johnson, this funding is intended to cover expenses including the Iran war.
The request has met immediate resistance. Congressional Democrats have voiced opposition to the supplemental spending package, setting the stage for upcoming legislative debates in Washington.
Frequently Asked Questions
What is the PCE index?
The Personal Consumption Expenditures (PCE) index is a measure of the prices paid by consumers for goods and services. It is the Federal Reserve’s preferred gauge for tracking inflation.
Why are semiconductor stocks rising?
Major players like Micron and Qualcomm reported strong earnings and raised their future revenue guidance, signaling high demand for chip technology.
What does “market rotation” mean?
Market rotation occurs when investors move money out of one sector (such as technology) and into others (such as industrials or financials) to find better value or different growth opportunities.
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