S&P 500 Eyes PCE Inflation Test After Slim Record Close

Benzinga reported Thursday that the S&P 500 closed at a fresh all-time high of 7,520.36 on Wednesday. The gain of just 0.02% was marginal. Softening oil prices helped offset pressure from semiconductor stocks. Early Thursday, S&P 500 futures dipped 0.13%, signaling a cautious open.

PCE Inflation Takes Center Stage

All eyes are now on April’s personal consumption expenditures price index. The PCE gauge is the Federal Reserve’s preferred measure of inflation. Economists surveyed by Dow Jones forecast headline PCE rising 0.5% month-over-month and 3.8% on an annual basis. Core PCE, which strips out food and energy, is expected to climb 0.3% for the month and 3.3% year-over-year. The reading carries extra weight given the arrival of new Fed Chair Kevin Warsh, whose rate-path preferences remain closely scrutinized by markets.

Also Read: Fed Chair Succession and What It Means for Rate Policy

Oil Prices Return as a Wildcard

Geopolitical risk resurfaced overnight and added another layer of uncertainty. Reuters reported that the U.S. military carried out fresh strikes on a military site inside Iran. WTI crude futures responded immediately, jumping roughly 2% to approximately $90 per barrel. Energy-driven inflation is already a concern for investors parsing the PCE data. An unexpected spike in oil could complicate the Federal Reserve’s calculus on rate cuts later this year.

The AI-Driven Bull Case

Despite the cautious mood, bulls have not abandoned the market. Technology and artificial intelligence stocks have driven much of the equity market’s advance this year. Investor appetite for semiconductor and AI-linked names remains firm even as valuations look stretched. Resilient corporate earnings have also helped underpin confidence. The benchmark index has continued setting records even as rate-cut expectations have shifted repeatedly.

Also Read: AI Stocks and the Valuation Debate Heading Into Summer

How Recent Bets Have Played Out

Wednesday’s session confirmed another correct bullish call. The S&P 500 opened at 7,526.01, above Tuesday’s closing level of 7,519.12. That outcome resolved the prior day’s prediction market contract in favor of an upward open. Traded volume on that contract reached roughly $125,265 before settlement. Thursday’s contract, however, showed a different lean before the open, with slightly more traders positioned for a lower start to the session than a higher one.

Read Next: What Rising Oil Prices Mean for Equity Markets This Summer