US stock indices closed mixed on Thursday, June 25, with Apple (NASDAQ: AAPL) shares plunging 6%, marking their most significant single-day drop since April 2025. In contrast, Micron Technology (NASDAQ: MU) surged over 15% after reporting earnings that significantly exceeded expectations, fueling a broader rally in chip and memory stocks, including a near 22% gain for SanDisk. Oil prices advanced, while gold prices stabilized.
Market Performance Overview
At the close, the Dow Jones Industrial Average was up 0.14% at 51,920.62. The S&P 500 edged down 0.01% to 7,357.49, and the Nasdaq Composite fell 0.46% to 25,358.6. The S&P 500's decline marked its fourth consecutive losing session, its longest such streak since March.
Data released by the Bureau of Economic Analysis showed the US Personal Consumption Expenditures (PCE) price index rose 4.1% year-over-year in May, the largest increase since April 2023. The core PCE index, which excludes food and energy, increased 3.4% annually.
The core PCE reading, reaching its highest level in nearly a year, indicates inflation is heating up beyond expectations, disrupting previous market assumptions about potential Federal Reserve interest rate cuts. The upward pressure on inflation stems from three primary factors: tariff adjustments, volatility in energy prices, and rising costs associated with massive investments in the artificial intelligence sector.
Federal Reserve officials have indicated that current monetary policy is in an appropriate position, leading markets to adjust their bets on near-term rate cuts, which in turn has impacted the pricing of risk assets.
According to the CME FedWatch Tool, the probability of the Fed holding rates steady in July is 69%, with a 31% chance of a 25-basis-point hike. For September, the probability of unchanged rates is 36.6%, with a 48.8% chance of a cumulative 25-basis-point hike and a 14.6% chance of a cumulative 50-basis-point hike.
Apple Announces Price Increases
Apple announced price increases for its Mac, iPad, and home device lines, citing cost pressures from a shortage of memory chips and storage components driven by the expansion of AI data centers.
The starting price for the MacBook Neo has risen from $599 to $699. The MacBook Air has increased from $1,099 to $1,299. The entry-level 14-inch MacBook Pro has moved from $1,699 to $1,999. The 11-inch iPad Pro is now priced from $999, up from its previous $1,199 starting point. The iPad Air starts at $749, up from $599. These price adjustments are global, while iPhone prices remain unchanged for now.
Following the announcement, Apple shares fell more than 6%. Other major technology stocks also declined broadly, with Microsoft down over 3%, Amazon down over 3%, Facebook down over 2%, Nvidia down over 1%, Google down 0.46%, and Tesla down 0.11%.
Tesla stated on Thursday that production capacity at its Berlin factory will increase by 20% starting in October, reaching 7,500 vehicles per week. This expansion will involve hiring an additional 1,000 workers. The factory's expansion plan, initially announced in April, aims to meet growing demand for the Model Y. In May, Tesla announced further investment to boost the plant's battery production line. Combined, these three initiatives are expected to create a total of 3,500 new jobs in vehicle manufacturing and battery production at the facility over the short to medium term.
Semiconductor Sector Gains Momentum
Chip stocks mostly rose, with the Philadelphia Semiconductor Index climbing 3.59%. SanDisk jumped 21.97%, Micron Technology gained over 15%, Applied Materials rose over 13%, Teradyne advanced over 10%, KLA Corporation increased over 7%, and Lam Research was up over 7%.
Micron Technology reported quarterly results that surpassed market forecasts, with the company projecting adjusted revenue for the fourth fiscal quarter to be at the high end of its guidance range, well above analyst expectations. The strong report bolstered the entire chip sector. The company is currently benefiting from increased demand for memory chips driven by the development of AI. The industry is closely watching memory chip price trends and the company's future performance.
Citigroup raised its price target for SanDisk from $2,025 to $2,500, citing a continuously improving outlook for NAND flash memory prices and initiating a 90-day positive catalyst watch on the stock.
Commodity Markets Update
Traders are closely monitoring shipping activity in the Strait of Hormuz following reports of vessel attacks.
WTI crude oil rose over 2% after four consecutive days of declines, settling around $72 per barrel. Brent crude increased by approximately 2%, having previously given up all gains made since the Iran conflict amid restored shipping through the Strait of Hormuz.
Economic data showed that while personal spending in May was stronger than expected, the month-over-month PCE price index was lower than market estimates, leading traders to scale back expectations for interest rate hikes. As of 3:30 PM ET, spot gold was up 0.9% at $4,036.1 per ounce.
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