Weekly update: A market in transition

I hope this message finds you well. Last week, investors shifted money away from AI mega-caps toward cyclical sectors and smaller companies. Inflation is proving stubborn, and U.S.-Iran tensions aren’t helping, putting upward pressure on energy prices and hardening the Fed’s resolve.

 Here’s how the markets performed, and a look behind what drove the numbers. 

Stock Index Performance 

• The S&P 500 slipped 1.95%.
• The Nasdaq 100 tumbled 4.24%.
• The Dow Jones Industrial Average edged up 0.60%.

What Moved Markets

Inflation Continues to Stick. May’s core Personal Consumption Expenditures (PCE) held at 3.4% year-over-year, well above the Fed’s 2% target and declining only marginally. As a reminder, core PCE reflects the prices paid for goods and services, but it does not account for the prices of goods considered more volatile, such as energy. However, despite a higher PCE, consumer spending still increased, sending a complicated message. All eyes will be on the Fed during July’s meeting to see the central bank’s take on the data.

Rates, the Dollar, and Commodities. The 10-year Treasury yield edged below 4.40%, but monetary policy is staying restrictive. The dollar hit a 13-month high on rate-hike expectations and a flight from riskier assets. Brent crude oil swung sharply, briefly touching four-month lows on hopes for progress in U.S.-Iran talks before reversing course after a new U.S. strike on Iranian targets. Gold held above $4,000 an ounce on geopolitical anxiety and inflation doubts.

Micron Posts an Impressive Quarter. Micron, a leading producer of computer memory and data storage products, posted fiscal third-quarter revenue that surged more than fourfold to over $41 billion, driven by increasing demand for AI infrastructure. The stock dropped double digits ahead of the report, then surged more than 15% on the results. This surge in revenue indicates that AI and AI-related companies do not seem to be slowing their growth.

The Week Ahead

Fresh data this week will put the higher-for-longer rate story to the test. Key releases include the ISM Manufacturing report on Wednesday, July 1; weekly jobless claims on Thursday, July 2; and the ISM Services report on Monday, July 6. Together, they will offer a clearer read on whether price pressures are easing and growth is holding up under restrictive policy.

As a reminder, the U.S. stock market will be closed on Friday, July 3, 2026, in observance of Independence Day. I hope you enjoy the holiday weekend!

Markets may be moving fast right now, but I am here to help you stay the course. If you have any questions about your portfolio, please do not hesitate to reach out.