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May’s CPI expected to show a rise in the headline and core annual rates. (0:17) Apple’s WWDC may be a dud. (1:57) Was the April low a good sign for the market? (5:47)
Inflation is back on the Fed’s radar with the consumer price index up this week and a solid May jobs report in the rearview mirror.
The May headline CPI is expected to have risen 0.2% on the month, with the annual rate rising to 2.5%, while the core rate is forecast to have risen 0.3%, rising to 2.9% annually.
Wells Fargo economists say: “The May CPI report will test whether April’s potential signs of tariffs were early glimmers of inflation effects to come or more typical monthly noise.”
“While May’s Consumer Price Index is not expected to deliver a stand-out increase, we look for inflation to pick up through the second half of the year,” they added. “Higher tariff rates lie behind the expected uptrend.”
We “expect some of the tariff costs to be absorbed via margins, which remain noticeably higher than before the 2018 trade war. That said, as the higher tariff regime persists, shielding consumers from the costs is likely to become more challenging. We anticipate the three-month annualized rate of core goods inflation to peak around 4%-5% in early fall, a little lower and later than our previous forecast published May 8 ahead of the 90-day pause on ‘reciprocal’ tariffs on China.”
T.S. Lombard says: “The the Fed is now shoved closer to policy being conflicted by employment and inflation moving in opposite directions.”
“Normally, a pre-emptive move can be justified because employment lags growth and inflation lags employment, but these are not normal times. Everything Trump has done and is set to do leans inflationary. Biden’s fiscal expansion helped move inflation and real rates higher even though hiring rates are low, and tariffs only add to Biden’s impact.”
“We already see the Fed’s conflict with the percent unemployed not on a temporary layoff back to pre-2018 levels yet the real funds rate sits 200BP higher,” they added.
Apple (NASDAQ:AAPL) is set to host its annual Worldwide Developers Conference starting Monday and while last year’s event focused on the promise of Apple Intelligence, this year’s event may be more geared on a back-to-basics approach.
Goldman Sachs analyst Michael Ng recently said that the keynote address is likely to focus on design improvements to its various operating systems, some information about its progress in artificial intelligence and other less sizable announcements than in years past.
“We expect AAPL to demonstrate continued progress toward incorporating AI into its operating systems through developer access to its AI models for app development … as well as the potential announcement of Gemini AI integration on iPhones given Alphabet CEO Sundar Pichai’s recent comments regarding hopes to finalize a partnership with Apple by mid-2025,” he said.
He’s also expecting the next version of iOS to include a number of convenience-oriented features, including public Wi-Fi access syncing, AI-powered battery optimization and more.
Rosenblatt Securities analyst Barton Crockett said the event is likely to be “low-key,” with expectations lower than they have been previously, with minor updates likely to get the majority of the attention.
It’s lean times for earnings, but GameStop (GME) reports on Tuesday.
Analysts are expecting an EPS of $0.04, marking a notable improvement from a $0.12 loss in the same quarter last year. This potential return to profitability reflects the impact of aggressive cost-cutting rather than top-line growth, making the sustainability of these savings a key focus for investors.
GameStop also recently revealed it had purchased 4,710 bitcoins, with a current estimated value of $513 million, or roughly 10% of its $4.7 billion cash reserve.
SA contributor MacroGirl notes that this shift toward bitcoin resembles a treasury strategy more than a retail turnaround but argues GameStop is entering at near-peak levels — raising risk compared to early movers like Strategy (MSTR). With declining sales, ongoing store closures, and unclear strategic direction, she maintains a Hold rating, urging caution as the company’s identity continues to evolve.
Also on the earnings calendar:
Casey’s General Stores (CASY), Calavo Growers (CVGW) and Lakeland Industries (LAKE) report Monday.
J.M. Smucker (SJM), United Natural Foods (UNFI) and GitLab (GTLB) join GameStop on Tuesday.
Oracle (ORCL), Chewy (CHWY) and SailPoint (SAIL) weigh in on Wednesday
Adobe (ADBE) reports on Thursday.
In the news this weeken, Meta Platforms (META) is in advanced discussions to invest potentially more than $10 billion into artificial intelligence startup Scale AI. Bloomberg says, if completed, the deal would rank among the largest private funding rounds in history.
The terms remain in flux and no final agreement has been reached. Scale AI, founded in 2016 by Alexandr Wang, provides data-labeling services used to train machine learning systems. The company’s technology underpins efforts by clients such as Microsoft and OpenAI, and it has emerged as a central player in the generative AI surge.
Its most recent funding round in 2024 pegged its valuation at approximately $14 billion. Earlier this year, reports suggested the company was pursuing a tender offer that could value it as high as $25 billion.
And Microsoft (MSFT) will soon roll out a ranking system for artificial intelligence models based on their safety performance, offering a feature its cloud customers can use to assess AI products from the likes of OpenAI and China’s DeepSeek (DEEPSEEK).
The FT says the tech giant’s “model leaderboard,” launched this month, will soon include a “safety” category, which will rank a range of AI products from Elon Musk’s xAI to France’s Mistral.
Available for tens of thousands of Microsoft clients using the company’s Azure Foundry developer platform, the leaderboard is expected to impact the demand for AI models and applications.
For income investors, Alphabet (GOOG) (GOOGL) goes ex-dividend on Monday with a payout date on June 16.
Travelers (TRV) goes ex-dividend on Tuesday, paying out on June 30.
Kohl’s (KSS) goes ex-dividend on Wednesday, with a June 25 payout date.
And Pimco (PCN) goes ex-dividend on Thursday, paying out on July 1.
And in the Wall Street Research Corner, are early lows the friend of the bull?
Carson Group’s Ryan Detrick says it’s “possible to be down 15% YTD at some point and come back to up double digits.”
“The key of course is an early low, like we saw 2009 and 2020, when both bottomed in March.”
This year could see a turnaround much like 2009, a year after the 2008 financial crisis, and 2020, the COVID-19 crash. In both years, the markets had fallen more than 15% earlier in the year but then eventually ended up rallying in double digits.
“2025 bottomed in April and the slingshot effect is in full motion,” Detrick said.
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