SG Morning Brief | S&P, Nasdaq Hit Records Despite PCE at Three-Year High; Core Inflation Cooler Than Feared

US Overnight

The S&P 500 rose 0.58% to a record 7,563.63, and the Nasdaq surged 0.91% to a record 26,917.47. The Dow edged up 0.05% to 50,668.97. Markets rallied despite the headline PCE inflation gauge hitting a three-year high. April headline PCE rose 0.4% MoM (below the 0.5% estimate) and 3.8% YoY, the highest since May 2023. Crucially, core PCE came in at just +0.2% MoM — below the +0.3% consensus — signaling that the energy-driven inflation shock is not yet leaking into broader prices. Core PCE YoY edged up to 3.3% from 3.2%, matching estimates. Q1 GDP was revised down to 1.6% annualized from the initial 2.0% estimate. The personal savings rate dropped to 2.6%, the lowest since June 2022, suggesting consumers are depleting reserves to cope with higher costs. WTI crude rose 1.78% to $90.26 and Brent gained 1.73% to $95.92 after Iran targeted a US air base, though reports of a 60-day ceasefire extension MOU kept the overall risk mood constructive. Gold fell 1.5% to $4,415.

Key Movers

Snowflake (SNOW) +37% — Snowflake surged 37% on its first full trading day after reporting Q1 revenue of $1.39 billion (+33% YoY), beating the $1.32 billion consensus, with adjusted EPS of $0.39 versus $0.32 expected. The standout was a $6 billion, five-year commitment from AWS to use Amazon's Graviton AI CPU chips through Snowflake's platform.

Oracle (ORCL) +7% — Oracle rose 6.67% to $203.70 as the AI software and infrastructure rally broadened. Microsoft gained roughly 3% and Palantir added about 4%. Snowflake's AWS deal validated enterprise AI infrastructure spend beyond the chip layer, lifting the entire cloud complex.

After hours, Dell (DELL) +38% — Dell surged 38.24% to $438.30 in after-hours trading after a blowout Q1. Revenue of $43.84 billion (+88% YoY) crushed the $36.1 billion estimate. AI server revenue hit $16.1 billion (+757% YoY), with $24.4 billion in AI orders and a $51.3 billion backlog. The company raised full-year revenue guidance to $165-169 billion from $138-142 billion, and now expects $60 billion in AI server revenue for FY27.

SGX Preview

The STI closed at 5,070.55 earlier in the week near its all-time high. DBS is near S$62.18 and UOB near S$37.91. The cooler-than-expected core PCE is mildly positive for Singapore rate-sensitive equities — it reduces the urgency for Fed hikes under Warsh. However, headline PCE at 3.8% and oil back above $90 keep the inflation overhang intact. The 60-day Iran ceasefire MOU, if confirmed, would be the most significant macro catalyst for Singapore in months.

Asia Pre-Market

S&P 500 futures are up 0.35%, Nasdaq futures up 0.65%, and Dow futures up 0.36%. Brent crude is at $94.18, easing from Thursday's $95.92 as the Iran ceasefire extension narrative holds. Gold is at $4,478 and Bitcoin at $75,842. The Friday session is the last of the week and could see position-squaring ahead of the weekend, particularly given the fragile Iran situation.

Today's US Earnings and Economic Calendar

No major economic data or SG-relevant earnings scheduled today. The week ends with the S&P 500 on track for its ninth consecutive weekly gain if it holds current levels.

Week in Review — This was a week defined by three forces pulling in different directions. The AI trade surged, inflation flared (PCE 3.8%, PPI 6% the week before), and geopolitics whipsawed (Iran ceasefire extension MOU, but also mutual strikes). The market chose to trade AI and peace over inflation. Whether that's rational or complacent depends entirely on whether the Iran deal holds through June.

One More Thing

The number that matters most from Thursday's data is not PCE at 3.8%. It is the personal savings rate at 2.6% — the lowest in nearly four years. Americans are spending more than they earn, drawing down reserves built during the pandemic era. That is sustainable for a quarter or two, not for a year. If oil stays above $90 and the savings rate keeps falling, consumer spending — which drives 70% of GDP — eventually cracks. The stock market at record highs is pricing in an Iran deal, falling oil, and resilient earnings. The savings rate is pricing in a consumer who is running out of runway. One of these views will be proven wrong by September.

This briefing is for informational purposes only and does not constitute investment advice.