Good morning. And happy Friday.

Crypto spent Thursday learning that it is not, in fact, an inflation hedge. Bitcoin (BTC) tumbled below $60,000 for the first time since 2024, sliding to roughly $59,334 by midday as a hot inflation print sent traders scrambling for the exits. Ether (ETH) sank in sympathy to around $1,561, and leveraged longs got vaporized in a cascade of liquidations. The pitch was always that digital gold would shine when the dollar lost its luster. Turns out that when real yields look juicy and the Fed sounds hawkish, even the true believers would rather hold something that pays interest. Diamond hands, meet opportunity cost.

Big Tech

Apple held its pricing poker face for years. The memory shortage just made it blink.

Apple (AAPL) on Thursday raised prices across its Mac, iPad, Apple TV and Vision Pro lines, sparing only the iPhone and accessories, in a rare mid-cycle hike it blamed squarely on the soaring cost of memory and storage chips. The entry MacBook Air jumped to roughly $1,299 from $1,099, with iPads up by as much as $200 on some configurations. Investors did not applaud the discipline: the stock sank 6% to about $275, its worst day in more than a year, lopping roughly $265 billion off Apple's market value.

Microsoft (MSFT) reached for the same lever the same day, lifting Xbox prices on the identical excuse. When two of tech's most pricing-shy giants raise their hands in unison, the table has changed.

The dealer here is artificial intelligence. Hyperscalers racing to fill data centers have hoovered up the world's memory supply, and the squeeze that traders nicknamed "RAMageddon" has sent DRAM contract prices up an estimated 90%-plus in the first quarter alone, per TrendForce. The pain is structural, not a blip: on Wednesday, Micron (MU) guided to roughly $50 billion in revenue for the current quarter and its shares leapt 17%, while management warned on the Bloomberg Tech broadcast that AI-fueled memory shortages could persist beyond 2027.

Memory Lapse: The deeper story is an industry whose oldest reflex, falling prices, is breaking down. If the companies that sell the picks and shovels keep their pricing power through 2027, the cost shows up on consumer receipts and, eventually, in the inflation prints the Fed is already fretting over (more on that below). Apple is betting its customers pay up rather than walk. The house usually likes those odds.

Economics

The Fed wanted proof that prices were cooling. The thermometer just read 4.1%.

The Personal Consumption Expenditures index, the inflation gauge the Federal Reserve actually watches, rose 4.1% in May from a year earlier, its fastest pace in three years. Strip out food and energy and core PCE still ran at 3.4%, the hottest core reading since October 2023 and a tick above what forecasters expected. On the month, headline prices climbed 0.4% and the core measure 0.3%.

The result lands on a central bank that is already sweating. The Fed has held its benchmark rate at 3.5%–3.75% for three straight meetings, and at last week's decision the new chair set a distinctly hawkish tone.

For a year the bullish case rested on a tidy assumption: inflation drifts back toward 2%, the Fed trims rates, and risk assets coast. May's reading throws cold water on that, then turns the burner back up. Consumer spending actually came in strong and first-quarter GDP was revised up to 2.1%, which is the problem. An economy this warm gives policymakers no excuse to ease.

The market has gotten the message. Bank of America now expects three quarter-point hikes this year, which would lift the funds rate to 4.25%–4.5%, a full reversal of the cuts traders penciled in last winter. New Fed Chair Kevin Warsh has fed the chill, telling reporters last week that the committee is "unambiguous and unanimous" about delivering price stability after five years of overshooting the target. Zentner's read is the consensus one: solid growth plus sticky prices is exactly the mix that keeps a central bank parked, or pushes it the other way.

Running Hot: The energy spike from this spring's conflict is still working through gas pumps and restaurant tabs, and tariffs are stacking on top. There's a newer culprit too: more than 80% of forecasters in a recent National Association for Business Economics survey think the AI build-out itself, with its appetite for chips, copper and electricity, will add to inflation over the next year. A summer of 4-handle prints would move the conversation from "when do cuts start" to "how many hikes are coming," and a market priced for easy money does not love that math. Bring a fan.

Markets

Wall Street threw two parties on Thursday, and only one of them had streamers.

The Dow punched through to a fresh all-time intraday high near 52,615 before easing back to close at 51,920.62, up 0.14%. The tech-heavy Nasdaq Composite went the other way, slipping 0.46% to 25,358.60 for a fourth straight loss, its longest skid since February. The S&P 500 split the difference and finished essentially flat at 7,357.49.

It was less a market move than a changing of partners. With Apple sliding and the AI complex wobbling, money pirouetted out of the Magnificent Seven and into the unglamorous corners of the index that actually pay dividends.

Defensive and cyclical names took the floor. Caterpillar (CAT) rose about 6%, while Johnson & Johnson (JNJ), UnitedHealth (UNH), Merck (MRK) and Boeing (BA) all gained between 2% and 5%, the kind of healthcare-and-industrial lineup that drags a price-weighted index higher. The flip side: Nvidia (NVDA), Apple, Microsoft and Amazon (AMZN) each fell, the megacaps that have carried the rally now acting as the anchor.

The rotation is what a sticky-inflation, higher-for-longer world looks like up close. When discount rates stop falling, the richly valued growth names that thrived on cheap money lose their edge, and boring earnings visibility suddenly looks like a feature. Hot inflation data and an Apple stumble simply handed the dance a soundtrack.

Spin Cycle: A record built on Caterpillar and Merck rather than chips is a healthier-looking market in one sense and a more nervous one in another. Breadth is widening, but only because the leaders are stumbling. If the megacaps steady themselves, the floor fills back up fast; if they don't, the Dow may find that dancing alone gets tiring. Watch who leads next.

Artificial Intelligence

The most anticipated debut on the Street's calendar might not RSVP this year.

OpenAI is leaning toward pushing its initial public offering into 2027, after advisers warned that CEO Sam Altman's hoped-for $1 trillion valuation might not survive current market conditions. The choice on the table is blunt: list now at a humbler number, or wait and swing for the trillion-dollar fences.

Investors didn't wait to react. SoftBank, which is building a stake of roughly 13% in OpenAI and had become the market's favorite proxy for the debut, tumbled about 12% in Tokyo on the reports overnight. The tremor spread fast to everything strapped to the same AI rocket.

A scrubbed launch here isn't a verdict on OpenAI's business so much as on Wall Street's appetite to underwrite a trillion-dollar story while the Fed talks about hiking and the Nasdaq logs losing streaks. It also rhymes with this week's volatile SpaceX debut, the cautionary tale the whole pre-IPO pipeline is now studying.

Holding Pattern: If the richest name in private tech can't find a clean runway to the public markets, the read-through for the entire AI-IPO pipeline is sobering. A trillion-dollar valuation needs a calm tape and easy money, and right now it has neither. Altman can afford to wait. The bankers counting on a blockbuster 2026 cannot.

Qual-comeback: Qualcomm (QCOM) used its investor day to pitch Wall Street on a data-center future, with CEO Cristiano Amon telling Bloomberg Tech he expects roughly $15 billion in annual AI data-center revenue by fiscal 2029 and naming Meta as a CPU customer.

Edge of the Deal: Onsemi (ON) agreed to buy Synaptics (SYNA) in an all-stock deal worth about $7 billion to push into "physical" edge AI, sending Synaptics sharply higher and Onsemi lower after the announcement.

Hold the Breadsticks: Darden's (DRI) light fiscal-2027 profit outlook, with Olive Garden same-store sales missing estimates, flashed a warning on the strapped lower-income consumer that the day's hot inflation print only sharpens.

Thursday was the day the market remembered that prices go up too, and not just the kind on a stock ticker. Inflation ran a fever, Apple passed the bill to your next laptop, crypto forgot it was supposed to be a hedge, and the Dow celebrated by leaning on a bulldozer maker and a vaccine giant. Somewhere a strategist is rewriting a "rate cuts incoming" note into "rate hikes, probably." Pack sunscreen; this summer's data is going to run warm.

That's the tape. We'll see you at the open. — AllThingsWallSt