PCE cooled where it mattered. S&P + Nasdaq hit new records.
The April inflation print delivered the dovish surprise the market needed. Headline PCE hit 3.8% YoY — the highest since May 2023 — but the monthly numbers came in below forecast (0.4% MoM vs 0.5% expected; core 0.2% vs 0.3%). Stocks were initially mixed on the release, but later in the session the S&P 500 and Nasdaq closed at fresh records as Snowflake’s blowout revived the AI trade. The bond panic eased modestly — yields held rather than collapsed.
⚡ PCE — hot annually, cooler month-over-month
The breakdown was nuanced:
- Headline PCE: +0.4% MoM (vs +0.5% expected) · +3.8% YoY (matched) — highest since May 2023
- Core PCE: +0.2% MoM (vs +0.3% expected) · +3.3% YoY (matched) — highest since October 2023
- Personal spending: +0.5% as Americans absorbed higher fuel costs
The annual rates confirm the inflation-acceleration story bonds have been pricing — but the monthly slowdown matters more for the Fed. Underlying pressures may be easing despite the Iran energy shock. Bank of America’s read: tariff-driven goods inflation is still bleeding through, but the monthly trajectory is decelerating.
Translation: the bond market got most of what it feared, but not the worst case. Yields held steady rather than collapsing. That’s enough for a measured relief.
🏆 S&P + Nasdaq closed at fresh records — tech reclaimed leadership
Thursday’s close:
- S&P 500: +0.58% → 7,563.63 🏆 new record close
- Nasdaq: +0.91% → 26,917.47 🏆 new record close
- Dow: +0.05% → 50,668.97 (essentially flat at near-record levels)
Stocks were initially mixed after PCE landed, but the tape firmed through the session. Tech resumed leadership after Wednesday’s rotation pause — Snowflake’s blowout earnings and $6B AWS Graviton deal reignited the AI-infrastructure trade, and Marvell confirmed it. The “AI just picked sides” thesis from yesterday’s setup played out exactly: winners ripped, the broader complex followed.
🇮🇷 Iran de-escalation signals + a GDP wrinkle
Two supporting stories that helped the tape:
Iran: reports of ongoing negotiations and temporary de-escalation removed some of the geopolitical premium intraday, and oil eased modestly. The picture stays murky, though — headlines have been conflicting, the White House has pushed back on some reports, and strike/drone activity continues around Hormuz. A trend in the right direction, not a confirmed deal.
Q1 GDP revised down: the second estimate came in at +1.6% — a meaningful cut from the initial +2.0% read, on weaker consumer spending and business investment. Still up from Q4’s 0.5%, but the growth side is softer than first reported. This is the mild-stagflation wrinkle: inflation sticky, growth slower than initially thought. Markets shrugged it off today because PCE dominated, but it’s worth filing away.
🚨 Standout movers
Big winners:
- Best Buy — surged on a strong Q1 beat, comps above the company’s outlook
- Snowflake — rallied on Wednesday’s $6B AWS deal momentum, dragging cloud/AI peers higher
- Marvell — continued strength on the AI data-center thesis
Earnings after the bell (still in motion): Dell (Q1 FY27), Costco, Autodesk, MongoDB, Okta — reactions developing.
📊 Thursday snapshot
📅 Tomorrow (Fri) — lighter day
- Chicago PMI
- Advanced trade balance; retail / wholesale inventories
- No major scheduled earnings — Dell / Costco after-hours reactions digesting
A lighter macro day to let the PCE move settle. Month-end positioning could amplify any late moves.
🧠 Bottom line
The bond market spent three weeks screaming that inflation was about to break the bull case. Today’s PCE gave it the worst it expected, but no worse. Annual rates at multi-year highs confirmed the scary trend; the monthly deceleration gave the Fed breathing room. The market took the win — but cautiously, not euphorically.
Underneath: GDP revised lower, the consumer is paying more for less, and Iran isn’t fully resolved despite the de-escalation signals. The stagflation-adjacent regime we’ve described all month didn’t go away today. It just got a softer monthly print to work with.
The AI trade reignited. Records returned. The bull case took today’s round.
Headline scary. Underlying dovish. Records returned.