The Morning in Review

Thursday opened with a clear macro anchor: April's core PCE index, the Federal Reserve's preferred inflation measure, printed at 3.3% year-over-year — matching estimates, but marking the highest reading since late 2023. On a month-over-month basis, the number came in at 0.2%, a touch below the 0.3% forecast, which offered a modest silver lining. It wasn't enough to change the broader narrative.

Real incomes — wages adjusted for inflation — fell compared to a year ago. Oil prices rebounded during the session, adding a further inflationary undercurrent. The combination reignited debate about whether the Fed's next move is a cut at all, or whether a hike has quietly re-entered the calculus. Markets had been pricing in rate reductions later this year; that timeline now looks less certain.

The S&P 500 wavered in the immediate aftermath of the release, a pattern consistent with previous sessions where PCE surprised to the upside. Rate-sensitive sectors — utilities, real estate, long-duration tech — faced the most pressure in early trading as Treasury yields ticked higher in response.

What Changed Since the Open

The session's dominant counterweight arrived in the form of SNOW. Snowflake's first-quarter results exceeded Wall Street expectations across every major metric, and the company raised its full-year guidance. The headline catalyst was a $6 billion partnership with Amazon Web Services (AMZN), which management described as an AI "inflection point" — the moment when AI-driven demand materially accelerates the underlying business. Shares surged between 35% and 40%, one of the largest single-session moves for a large-cap software stock in recent memory.

The result matters beyond Snowflake itself. Enterprise software had been under a cloud of skepticism: investors questioned whether AI investment was translating into actual revenue for data and analytics companies, or whether the gains were concentrated in chips and infrastructure. Snowflake's beat, paired with a guidance raise, is the clearest signal yet that at least some software names are converting the AI buildout into durable customer spending. The move lifted sentiment across cloud and data-infrastructure peers.

Salesforce (CRM) had already reported a clean beat earlier in the week, though its stock reaction remained muted given lingering questions about AI displacement risk to its core CRM business. Snowflake's results add a different data point: AI as accelerant, not just threat.

The Other Stories Holding

Boeing (BA) continued to trade positively after China's Commerce Ministry confirmed an agreement to purchase 200 aircraft. The deal is significant given the strained backdrop of U.S.-China trade relations and provides Boeing with meaningful order-book visibility at a moment when the company has spent years managing production setbacks and regulatory scrutiny. Large aircraft orders of this scale typically span several years of deliveries, making the revenue contribution durable rather than immediate — but the market read it as a genuine positive.

Dell Technologies (DELL) also held gains after securing a $9.7 billion Pentagon contract to supply Microsoft (MSFT) software to the U.S. military. Defense contracts of this scale carry multi-year revenue visibility and relatively low execution risk, making them particularly valued by investors in capital-intensive hardware and services businesses. The award underscores a broader trend: commercial technology firms are increasingly displacing traditional defense contractors as the primary suppliers of military software infrastructure.

JPMorgan Chase (JPM) remained in focus after CEO Jamie Dimon signaled the bank has capacity to deploy up to $20 billion for strategic acquisitions. The statement is notable given JPMorgan's scale as the largest U.S. bank by assets — any significant deal would face heightened antitrust and regulatory review. Analysts see the war chest as pointing toward wealth management, fintech, or international targets. The stock's reaction was positive, though the signal remains speculative until a specific target emerges.

Under the Surface

The bond market's reaction to the PCE print has been the cleaner read on the day's true macro tone. Treasury yields moved higher following the release, reflecting reduced confidence in near-term Fed easing. The VIX has remained elevated relative to recent sessions, consistent with a market that is not fully committed to either the bullish corporate narrative or the bearish macro one.

The tension is structural, not just intraday. Goldman Sachs has estimated $800 billion in AI infrastructure investment will flow through U.S. markets this year — a figure that encompasses data centers, chips, and power infrastructure across the major hyperscalers. That spending cycle is real, and Snowflake's results confirm some of it is reaching software. But it is happening against a backdrop where the Fed's path is less clear than it was three months ago, real household incomes are declining, and oil prices are rebounding.

Sector rotation has been visible. Technology and industrials — buoyed by Snowflake, Dell, and Boeing — have outperformed. Financials are mixed, with JPMorgan's M&A ambitions adding a speculative premium that not all investors are willing to price in. Rate-sensitive sectors remain under pressure.

The Afternoon Setup

The key question for the remainder of Thursday's session is whether the equity market can sustain the morning's corporate-driven optimism against a fixed income market that is clearly repricing rate expectations. When bond yields rise in response to an inflation print, equity multiples — particularly for growth stocks — face mechanical pressure. Snowflake's move is large enough to distort index-level readings, but the broader market internals will tell a more honest story.

Watch the 10-year Treasury yield closely into the close. If it continues to climb, expect pressure on rate-sensitive names to intensify even as headline indices hold up. Any Fed commentary responding to the PCE print — either today or in the days ahead — will be the next significant catalyst for rate expectations.

For individual names, SNOW's close will be watched as a signal of whether the initial surge holds or fades as momentum traders take profits. BA and DELL are cleaner stories with less event-driven volatility risk. JPM remains a show-me story until Dimon's acquisition signals move from strategic posturing to a named target.