The Day AI Winds and Apple Shock Arrived Together: Signals Read by Wall Street

U.S. stocks finished mixed. The Dow rose about 0.1%, the S&P 500 held near flat, and the Nasdaq fell 0.5%, underscoring a pullback in tech shares. Micron surged on booming AI demand, lifting semiconductor stocks, but Apple plunged more than 6% after hiking Mac and iPad prices in response to a sharp rise in memory costs, weighing on the broader tech sector.

Early in the session, U.S. economic data painted a picture of solid growth but slow progress on inflation. First-quarter GDP was revised up to a 2.1% annualized gain, and core PCE inflation rose 0.3% month-over-month as expected, though the PCE deflator stood at 4.1% year-over-year—still elevated. Initial jobless claims remained firm at around 215,000, and durable goods orders fell by less than forecast. These results support the Fed’s “hawkish pause”—holding rates steady while keeping the door open to future hikes—and reinforce expectations for a prolonged period of higher interest rates.

On the policy front, all 32 large banks passed the Fed’s stress tests yesterday, easing worries about financial-system stability. At the same time, easing tensions in the Middle East and the resumption of shipping through the Strait of Hormuz pushed Brent crude back down to around $70 a barrel, exerting pressure on energy stocks and bolstering hopes for reduced inflationary pressures.

Investors will want to keep an eye on the widening divide between companies benefiting from AI-driven revenue growth and those forced to pass rising costs onto consumers, as well as the potential for extended market volatility under the Fed’s data-dependent approach.