It’s been a week of stark contrast on Wall Street. Crude collapsed below $70 as the Strait of Hormuz reopened, yet the Fed’s preferred inflation gauge hit a three-year high, the Magnificent Seven kept bleeding, and Micron Technology Inc. (NASDAQ:MU) delivered what analysts called “a memorable beat.”
Oil Tanks As Hormuz Reopens
WTI crude has now fully wiped out its war premium. Oil is also down more than 20% on the month, on pace for its worst monthly performance since March 2020.
Saudi Arabia resumed loading tankers at Ras Tanura, and Persian Gulf exports recovered to roughly 75% of prewar levels, according to Goldman Sachs estimates.
On Friday, President Donald Trump said Iran had fired four “one-way attack drones” at ships transiting the Strait of Hormuz, calling it “a foolish violation of our ceasefire agreement.” Markets shrugged. Oil held onto its losses.
Fed’s Favorite Inflation Gauge Hits 3-Year High
Yet inflation is still catching up to the shock from the Iran war. Core Personal Consumption Expenditure (PCE) – the Fed’s favorite inflation gauge – rose to 3.4% year-over-year in May, the highest since October 2023.
Headline PCE jumped to 4.1%, the hottest since April 2023. At his first FOMC meeting on June 17, new Chair Kevin Warsh held rates steady at 3.50%–3.75% but signaled openness to a hike.
Markets now price an October hike as the base case.
Hyperscalers Falter
Microsoft Corp. (NASDAQ:MSFT) is down about 18% on the month — its worst June since 2000, as investors keep dumping the stock over AI capex fears.
Fellow hyperscaler Oracle Corp. (NYSE:ORCL) has fared even worse, plunging 30% in June and erasing more than $300 billion in market value after warning of $70 billion in fiscal 2027 capex.
Apple Inc. (NASDAQ:AAPL) added a new twist to the narrative this week, raising prices across its product line to offset surging memory costs — a direct pass-through of the AI-driven memory boom into consumer wallets.
The Roundhill Magnificent Seven ETF (NYSE:MAGS) is heading for its worst month since inception, with over $1 billion in outflows.
Micron’s Memorable Beat
The flip side: a windfall for AI infrastructure suppliers.
Micron posted fiscal third-quarter revenue of $41.5 billion, up 346% on the year. Gross margin hit 84.6%.
Earnings per share came in at $24.67 versus $1.68 a year ago, nearly a 15-fold increase.
Shares jumped 15% on Thursday as the stock saw multiple price-target hikes.
Michigan Sentiment Bounces
After three monthly declines drove the index to its lowest reading ever, the University of Michigan’s final June Consumer Sentiment rose 9% to 48.9, yet sentiment is still 19% below a year ago. Long-run inflation expectations fell back from 3.9% to 3.4%.
Photo: Matej Kastelic/Shutterstock
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