Wall Street enters the week with inflation back at center stage. After a Federal Reserve meeting that pushed rate cuts off the table, investors now wait on one number above all others: the May reading of the personal consumption expenditures (PCE) price index, the central bank’s preferred inflation gauge, due Thursday.

The S&P 500 has spent June hovering near the record territory it first reached in early summer, when it closed above 7,600 for the first time. But the index has struggled to push decisively higher since the Fed turned hawkish, and this week’s data and earnings will test whether the rally has more room to run.

The week’s main event: Thursday’s PCE report

The marquee release lands Thursday, June 25, at 8:30 a.m. EDT, when the Bureau of Economic Analysis publishes its Personal Income and Outlays report for May. Buried inside is the core PCE price index, which strips out volatile food and energy costs and is the measure the Fed watches most closely when setting policy.

The stakes are higher than usual. In April, core PCE rose 0.2% on the month and 3.3% from a year earlier, according to the BEA — up from 3.2% in March and still well above the Fed’s 2% target. Another firm print would reinforce the message markets received last week: that inflation is proving sticky and the path to lower rates is narrowing. For a refresher on how central banks adjust the flow of monetary stimulus, see our explainer on tapering and monetary policy tools.

Why the Fed’s tone raised the stakes

The backdrop is a Federal Reserve that has turned notably more cautious. On June 17, in its first meeting under new Chair Kevin Warsh, the Federal Open Market Committee held the federal funds rate steady at 3.50% to 3.75%. The hold was expected; the surprise was the guidance.

According to the Fed’s June Summary of Economic Projections, nine of 18 policymakers now expect at least one rate hike before year-end, and the committee trimmed its forward guidance to a shorter, more open-ended statement. Markets read the shift clearly: futures repriced toward higher-for-longer rates, and the easing cycle investors had banked on for 2026 was suddenly in doubt. A hot PCE number Thursday would harden that view; a soft one could revive hopes that the Fed’s hawkish turn is temporary.

Treasury yields and the Iran wildcard

The bond market is where the pressure shows up first. The 10-year Treasury yield climbed back toward 4.5% after the Fed decision, lifting borrowing costs and weighing on rate-sensitive technology shares that dominate the major indexes. Investors weighing how fixed income fits alongside stocks in this environment can review our guide to investing in bonds.

One offsetting force is energy. A preliminary U.S.–Iran agreement eased fears of an oil-supply shock and pulled crude lower in recent sessions, taking some heat out of the inflation outlook. The catch: Thursday’s PCE covers May, before the deal took shape, so the data may still reflect the elevated energy prices that drove inflation higher this spring. The market reaction will hinge on how investors weigh a backward-looking print against a forward-looking truce.

Earnings: FedEx, Micron and the consumer

The earnings calendar is light but pointed. FedEx (FDX) reports fiscal fourth-quarter results Tuesday after the close, and as a global shipper it serves as a real-time read on freight demand and the health of the economy; analysts polled by Zacks expect earnings of about $5.91 per share on roughly $24.18 billion in revenue. Micron (MU) follows Wednesday with fiscal third-quarter numbers that Wall Street will mine for signs that the AI-driven boom in high-bandwidth memory is still accelerating — a key tell for the chip trade that has powered the market’s gains. Consumer names including Carnival and General Mills round out the week, offering a snapshot of household spending. With so much of the index riding on a handful of megacap technology stocks, some investors look to funds built to sidestep that concentration, such as these S&P 500 ETFs without the Magnificent 7.

What to Watch for the Open

  • May core PCE (Thursday): the week’s pivotal data point. A reading at or above April’s 3.3% annual pace would reinforce the Fed’s hawkish stance; a cooler number could spark a relief rally.
  • The 10-year Treasury yield: whether it holds above 4.5%. Further gains would cap equities and pressure tech.
  • Micron’s guidance: any read on AI memory demand will ripple across the semiconductor complex.
  • FedEx’s outlook: a bellwether for global shipping and the broader economy.
  • Fed speakers: follow-up remarks from Warsh or other officials that confirm — or soften — last week’s hawkish projections.

With the Fed leaning against cuts and yields elevated, the burden of proof this week falls on the data. A benign PCE print would give the bulls room to retest the highs; a hot one would hand the hawks the last word.