Finance

Market breadth improved significantly last week as capital moved out of high-growth technology giants and into defensive sectors like healthcare and utilities. While the Nasdaq Composite fell nearly 5% over the past week due to profit-taking and concerns over AI infrastructure spending, the equal-weighted S&P 500 and Russell 2000 indices reached record highs, reflecting a broader participation in the current market rally.

The Federal Reserve's preferred inflation gauge, the core PCE, accelerated to 3.4% in May, its highest level since late 2023. This stronger-than-expected reading, coupled with resilient economic data, has prompted some Fed officials to shift their outlook from potential rate cuts to a possible rate hike later this year. Markets are now pricing in elevated odds for a tightening move by December as the central bank prioritizes price stability.

Micron Technology shares surged 16% following a quarterly report that significantly exceeded revenue and profit estimates, fueled by insatiable demand for AI memory chips. However, the rising costs of these components have pressured hardware manufacturers like Apple, which recently announced price hikes for its device lineup. This dynamic has sparked fresh debate among investors regarding the sustainability of current AI valuations and the timing of return on massive infrastructure investments.