Finance

Consumer inflation accelerated to 4.2% in May, the highest level in three years, largely due to a 23.5% surge in energy costs amid conflict with Iran. Gasoline prices have jumped over 40% annually, placing significant pressure on household spending and broader market sentiment.

The Dow, S&P 500, and Nasdaq all recorded weekly gains as investors reacted positively to potential de-escalation of tensions in the Middle East. Markets were also bolstered by a drop in crude oil prices and a significant rally in small-cap stocks, with the Russell 2000 leading the market with a 3% jump.

Financial markets have largely abandoned expectations for interest rate cuts in 2026 as newly appointed Fed Chair Kevin Warsh faces resilient labor data and persistent inflation. Analysts suggest the Federal Open Market Committee may remove its easing bias at the upcoming June meeting, with some traders now pricing in a potential rate hike by December.