Wall Street Brief (June 26): U.S. equities remained mixed on Thursday, as the PCE inflation index rebounded above 4%, dampening rate-cut expectations and slightly tightening market sentiment; Apple’s sharp drop weighed on tech heavyweights and the Nasdaq, while the memory storage sector continued its strong performance.

Summary: U.S. equities stayed mixed on Thursday, with the S&P 500 down 0.01%, the Nasdaq falling 0.46%, the Dow Jones rising 0.14%, and the Russell 2000 gaining 0.71%. Large-cap tech stocks remained weak, while small-caps and traditional sectors outperformed, indicating the market has not entered a broad-based pullback. The VIX rose to 18.89, up 1.40% on the day, reflecting slightly tighter sentiment compared to the prior session—still in cautious territory but not yet in panic mode. Two key drivers shaped pricing: first, May U.S. PCE inflation re-accelerated above 4%, prompting further downward revisions to near-term monetary easing expectations; second, Apple’s stock plunged after it raised prices on multiple Mac and iPad models, dragging down large-cap tech and the Nasdaq. Sector-wise, industrials, healthcare, and materials outperformed, while memory storage and semiconductors also strengthened noticeably, though software and cloud computing remained under pressure. Across major asset classes, the 10-year Treasury yield fell 1.33%, gold declined 0.11%, crude oil dropped 0.31%, Bitcoin slid 0.68%, and the U.S. Dollar Index decreased 0.11%.

I. Major Events

1. May U.S. PCE inflation rebounds above 4%, prompting markets to further pare back expectations for monetary easing

May U.S. PCE inflation rose to 4.1%, surpassing the 4% mark again, as the Bureau of Economic Analysis (BEA) released its May Personal Income and Outlays report on the same day. The data suggest that inflationary pressures have not yet eased enough to reassure the Federal Reserve, making a swift pivot to a more accommodative policy stance unlikely in the near term. For markets, this continues to cap valuation headroom for rate-sensitive and high-multiple assets and makes it difficult to rebuild momentum in rate-cut trades.

2. Apple raises prices on Macs and iPads, passing upstream cost pressures to end consumers

Apple raised prices on multiple Mac and iPad models, which the market interpreted as upstream memory and component cost pressures being passed through to end products. At the same time, investors also worry that price hikes could weaken demand for consumer electronics. Apple shares tumbled 6.12% in a single day, directly dragging down large-cap tech stocks and the Nasdaq, and prompting the market to reassess the profit margins and sales resilience of hardware manufacturers amid the AI-driven hardware rally.

II. Major Trends

From a single-day perspective, the market weakness on Thursday was not broad-based; rather, large-cap tech stocks continued to weigh on the Nasdaq. The Nasdaq fell 0.46%, the S&P 500 closed nearly flat, the Dow Jones rose 0.14%, and the Russell 2000 gained 0.71%. Capital did not broadly exit risk assets but instead continued rotating from the most crowded tech mega-caps into small caps and traditional sectors.

Looking at the three-month horizon, growth-style equities still maintain their medium-term advantage. QQQ rose 22.00% over three months, significantly outpacing DIA’s 12.29% gain; SPYG climbed 16.01%, continuing to beat SPYV’s 7.47% increase. Although short-term pullbacks have persisted, the medium-term leadership has not shifted back from growth to value.

Over a two-week horizon, small caps remain the strongest among the four major indices. IWM gained 3.17% over two weeks, DIA rose 2.22%, while MAGS extended its two-week decline to 5.92%. Tech mega-caps continue their short-term correction, and market breadth remains stronger than the large-cap tech segment itself.

III. Market Sentiment

The VIX closed at 18.89, up 1.40% on the day, indicating slightly tighter sentiment compared to the prior session, though far from a state of panic. The CNN Fear & Greed Index dropped to 25, down from 26 the previous trading day, keeping overall sentiment in cautious territory.

Demand for protective options remains elevated. The CBOE total put/call ratio stood at 0.85, with the index options put/call ratio at 1.25 and the equity options put/call ratio at 0.72. Defensive positioning is still evident on the index side, but no disorderly panic has emerged in individual stocks. The market appears to be undergoing structural adjustments centered around rate expectations and large-cap tech names.

IV. Market Scan

1. Index ETFs:On Thursday, the divergence among the four major indices’ corresponding ETFs persisted. Russell 2000 (IWM) performed the strongest, while the Dow (DIA) also held up well. The S&P 500 (SPY) traded largely flat, and the Nasdaq-100 (QQQ) was relatively the weakest. This structure indicates that capital has not yet returned to broadly chasing tech mega-caps.

2. Sector Performance:Industrials (XLI) led gains with a 2.17% rise, followed by healthcare (XLV) up 1.49% and materials (XLB) up 1.33%. Consumer discretionary (XLY) fell 1.49%, making it the weakest sector of the day. Apple’s sharp drop weighed heavily on consumer electronics and large-cap tech sentiment, while traditional economy and more defensive sectors relatively outperformed. At the sub-industry level, DRAM surged 9.95%, semiconductors (SMH) rose 2.90%, oil services (OIH) gained 2.49%, and transportation (IYT) added 1.57%. On the downside, brokerages (IAI) fell 2.00%, cloud computing (SKYY) dropped 1.98%, uranium miners (URA) declined 1.79%, and software (IGV) slid 1.64%. Notably, the strength along the AI memory supply chain was most pronounced, signaling that Micron’s strong earnings continue to ripple through to peers like MU, WDC, and STX.

3. The Magnificent Seven Tech Stocks:Among the Magnificent Seven tech stocks, Tesla (TSLA) fell just 0.11%, the smallest decline; Apple (AAPL) dropped 6.12%, the worst performer; Microsoft (MSFT) slid 3.46%, and Meta fell 2.65%. Downward pressure within large-cap tech remained concentrated in Apple and software-heavy names, with the group failing to mount a unified rebound.

4. U.S.-Listed Chinese Stocks:Chinese ADRs broadly weakened. Futu (FUTU) declined just 0.18%, the smallest drop; Alibaba (BABA) fell 4.74%, the weakest performer, followed by Baidu (BIDU) down 3.55%, PDD Holdings (PDD) down 3.22%, the China Internet ETF (KWEB) down 2.76%, NetEase (NTES) down 2.40%, and Bilibili (BILI) down 2.24%. Market risk appetite has not meaningfully returned to Chinese ADRs.

5. Cryptocurrencies:Bitcoin slipped 0.68%, and related equities continued to diverge. RIOT rose 1.24%, while MSTR plunged 9.35% and CRCL fell 3.06%. This suggests investors remain cautious toward high-beta cryptocurrency-related stocks, with risk appetite yet to show genuine improvement.

$S&P 500 Index (.SPX.US)$ $SPDR S&P 500 ETF (SPY.US)$ $NASDAQ 100 Index (.NDX.US)$ $Invesco QQQ Trust (QQQ.US)$ $Dow Jones Industrial Average (.DJI.US)$ $State Street® SPDR® Dow Jones Industrial Average® ETF Trust (DIA.US)$ $Russell 2000 Index (.RUT.US)$ $iShares Russell 2000 ETF (IWM.US)$ $Roundhill Magnificent Seven ETF (MAGS.US)$ $USD (USDindex.FX)$ $U.S. 10-Year Treasury Notes Yield (US10Y.BD)$ $iShares 20+ Year Treasury Bond ETF (TLT.US)$ $XAU/USD (XAUUSD.CFD)$ $SPDR Gold ETF (GLD.US)$ $CBOE Volatility S&P 500 Index (.VIX.US)$ $CME-Bitcoin RR Futures (JUL6) (BTCmain.US)$ $iShares Ethereum Trust ETF (ETHA.US)$ $NVIDIA (NVDA.US)$ $Tesla (TSLA.US)$ $Meta Platforms (META.US)$ $Amazon (AMZN.US)$ $Alphabet-C (GOOG.US)$ $Microsoft (MSFT.US)$ $Apple (AAPL.US)$

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