(Updates with index/price moves and geopolitical news from the first paragraph.)
US equity indexes traded mixed after Micron Technology's (MU) blockbuster results, fueled by strong demand for memory, failed to lift technology amid a slump in Apple's (AAPL) shares on reports that the iPhone maker increased product prices, and as the annual inflation rate surged to a three-year high.
The Nasdaq Composite fell 0.5% to 25,358.60 on Thursday. The S&P 500 slipped less than 0.1% to 7,357.49, ceding intraday gains. The Dow Jones Industrial Average rose 0.1% to 51,920.62, off session highs. Communication services and consumer discretionary led the decliners, while industrials and health care were among the top gainers. Technology was among the decliners.
Micron's shares rose almost 16%, among the top gainers on the S&P 500 and the Nasdaq, after the company reported fiscal Q3 adjusted earnings and revenue that topped estimates, with Q4 guidance also beating consensus. Shares were up more than 19% earlier in the session. Rising production of HBM, the high-bandwidth memory used in AI accelerators, is driving strong momentum for Micron, with HBM revenue already above $1 billion and market share topping 20%, RBC Capital Markets said in a note.
Apple shares slumped 6.1%, among the worst performers on the Nasdaq and the Dow, after the company, according to media reports, raised prices of its iPads and MacBooks amid surging memory and storage chip costs.
Meanwhile, in economic news, annual inflation accelerated to 4.1% in May, the fastest print since April 2023, matching consensus, based on the personal consumption expenditures, or PCE, price index data from the Bureau of Economic Analysis. It follows a 3.8% gain in April. Core PCE inflation, which strips out food and energy, accelerated to 3.4% from a year ago, as expected, from 3.3% in April. That's the highest reading since October 2023.
"While we have heard from a number of Fed officials increasingly willing to consider a higher level of rates, as the latest June dot plot shows, the Committee is clearly divided, with essentially the other half viewing policy as in exactly the right spot and anticipating no additional change this year," Stifel Chief Economist Lindsey Piegza said in a note.
While the probability of two interest rate increases by December remains elevated, the likelihood slipped to 30% following the PCE data, versus 31% on Wednesday, according to the CME FedWatch tool. There is only a 19% chance that the target rate for fed funds will remain in the 3.5% to 3.75% range by the end of this year.
Most US Treasury yields declined, with the 10-year down one basis point to 4.39%. The two-year rate dropped 1.4 basis points to 4.12%.
Gold futures climbed 1% to $4,047.60, while silver futures added 0.5% to $58.80.
In geopolitical news, Iran's Islamic Revolutionary Guard Corps attacked a Singapore-flagged cargo ship Thursday in the Strait of Hormuz, The Wall Street Journal cited two senior US officials in a news report. Subsequently, the International Maritime Organization suspended its evacuation plan for vessels stranded in the Strait of Hormuz, IMO Secretary-General Arsenio Dominguez said in a report from Al Jazeera, a Middle East news broadcaster, on Thursday.
This comes after the Revolutionary Guard had warned that commercial vessels only use routes approved by Tehran, Al Jazeera reported. The warning followed an announcement from Oman setting out a new shipping transit route through the strait on Wednesday, saying it had coordinated the route with the International Maritime Organization, the report said.
The front-month global benchmark North Sea Brent jumped 1.3% to $74.69 per barrel, while the US West Texas Intermediate rose 2.2% to $71.92 per barrel, rebounding after touching pre-Iran war levels this week.