Wall Street enters the new week with one number towering over the rest: May inflation.

After a stretch that carried the S&P 500 above 7,600 for the first time, stocks stumbled into the weekend. A chip-led selloff dragged the Nasdaq Composite down roughly 4% on Friday, its worst session in more than a year, and pulled the S&P 500 down more than 2%. The retreat started Thursday, when Broadcom (AVGO) left its full-year AI chip targets unchanged and triggered profit-taking across semiconductors, even as the Dow Jones Industrial Average closed at a record.

Then came the jobs report. U.S. employers added 172,000 positions in May, the Bureau of Labor Statistics said, roughly doubling the consensus near 85,000, while the unemployment rate held at 4.3% and prior months were revised higher. “This was a massive upside surprise,” said Cooper Howard, director of fixed income research at the Schwab Center for Financial Research. Stocks read the strength as a problem rather than a relief, because a hotter economy gives the Fed less room to ease. The benchmark 10-year note yield jumped to 4.54%, and odds of a rate hike at some point this year rose to about 57% from 50% before the data, according to the CME FedWatch Tool.

May CPI is Wednesday’s main event

The week’s marquee release lands Wednesday, June 10, at 8:30 a.m. ET, when the BLS publishes the May Consumer Price Index. It matters because inflation has been moving the wrong way: April’s headline CPI came in at 3.8%, the hottest reading since 2023.

Energy is the swing factor. With crude near $93 a barrel and Brent above $94 after disruptions in the Middle East, economists at the University of Michigan project headline inflation running near 4% year over year this quarter. Prediction markets currently see better-than-even odds that the May print tops 4.2%. A high number would push yields higher still and pressure rate-sensitive corners of the market; a cooler-than-feared figure could ease the pressure that built up on Friday.

Yields, bonds and Warsh’s debut

The path of the 10-year yield runs through that CPI report. Because bond yields move inversely to prices, a fresh inflation scare would lift yields and tighten financial conditions without the Fed lifting a finger.

The central bank itself is the backdrop to everything. The FOMC has held the federal funds rate at a range of 3.50% to 3.75% for three straight meetings, and its next decision arrives June 16-17. It will be the first meeting chaired by Kevin Warsh, who was sworn in May 22 after a narrow Senate confirmation. Markets remember that President Trump picked Warsh in part to cut rates, yet a re-accelerating CPI could box him in. The Fed still projects one cut this year; futures traders see none. A new chair’s communication style can itself move markets, as investors saw when leadership last changed in 2018.

Other data and earnings on deck

Beyond the inflation print, the calendar fills out quickly. May existing home sales are due Tuesday, June 9. Oracle (ORCL) and Chewy (CHWY) report Wednesday. Thursday, June 11, brings May PPI, an ECB rate decision and results from Adobe (ADBE) and Lennar (LEN). The University of Michigan’s preliminary June consumer sentiment survey closes the week Friday. Apple (AAPL), meanwhile, opens its Worldwide Developers Conference on Monday, with investors watching for AI announcements including a Siri overhaul.

What to watch this week

  • May CPI (Wednesday): a headline reading at or above 4% would validate the inflation worry; a softer print could spark relief.
  • The 10-year yield: holding above 4.5% keeps pressure on growth stocks; a pullback would help.
  • The chip trade: whether Friday’s semiconductor selloff deepens or money keeps rotating into financials and healthcare.
  • Oil prices: WTI near $93 is feeding the inflation narrative; any further spike raises the stakes for CPI.
  • Fed setup: commentary and positioning ahead of Warsh’s June 16-17 debut, plus updated economic projections.

For now, the rally that defined late spring is on pause, and Wednesday’s inflation number will go a long way toward deciding whether the bid returns.

 [1]