The Federal Reserve's preferred inflation gauge, the personal consumption expenditures price index, rose 4.1% in May from a year earlier, the largest annual increase since April 2023, the Commerce Department reported Thursday. On a monthly basis, the index increased 0.4%, matching April's rise and down from 0.7% in March. Inflation has remained above the Fed's 2% target for more than five years, prompting concern among households and policymakers. The gauge, which the Fed prefers to the consumer price index because it weights housing less and reflects changing purchasing patterns, reached a three-year high. Gas prices, a key component, climbed to about $4.50 a gallon nationally in May before falling to $3.92 by Thursday, according to AAA, keeping prices more than 20% higher than a year ago as the driving season began. Prices for semiconductors and other computer equipment also contributed to the increase, reflecting heightened demand linked to artificial intelligence investments. The Fed kept its benchmark interest rate unchanged this year, reversing a January forecast that had penciled in two rate cuts; some economists now expect the central bank to raise rates later in 2026. New Fed chair Kevin Warsh said the agency remains determined to bring inflation down to its 2% goal but offered no specific steps. Market expectations of a possible rate hike sparked volatility, especially in technology stocks, which had been expanding rapidly. Consumer spending rose at a solid pace, with real spending up 0.3% from April to May, and inflation-adjusted incomes increased 0.3% for the first time in four months, potentially supporting future consumption. Mark Vitner, chief economist at Piedmont Crescent Capital, noted that inflation had not exceeded 2.5% for nearly a decade before the pandemic, making recent spikes more difficult for households to accept. The Fed has not signaled a change in policy, leaving the outlook for interest rates and economic growth uncertain.
Macro signals, central banks, earnings, and the deals moving capital today.
In April, bipartisan senators introduced the Next-Generation Geothermal Research and Development Act, directing the U.S. Department of Energy to support the commercialization of advanced geothermal technologies.
Geothermal energy extracts heat from beneath the Earth's surface and can provide baseload power with low emissions, drawing support across party lines for its potential to increase energy independence and complement oil and gas drilling expertise.
Enhanced geothermal systems (EGS) fracture underground rock using hydraulic pressure, a method also used in oil and gas drilling that has raised concerns about induced seismicity, according to Gernot Wagner, a climate economist at Columbia Business School.
Quaise, a company spun out of MIT, is developing millimeter wave drilling that uses high‑frequency electromagnetic waves to melt and vaporize rock, eliminating the need for physical drill bits, as explained by communications manager Harry Kelso.
The technology could enable access to geothermal resources at temperatures between 300°C and 500°C, potentially delivering ten times more energy per well and improving economics, Kelso said, though initial costs remain high because conventional drill bits wear quickly in hard rock.
Water use is another consideration; the system requires substantial water initially but is designed to circulate the fluid continuously, according to Kelso.
Fervo Energy, a next‑generation geothermal firm, became the first to list on Nasdaq in May with a valuation near $7.7 billion and has a power purchase agreement with Google for its Utah plant, which is projected to cost about $7,000 per kilowatt, more than four times the cost of solar or wind.
Developers aim to have the Oregon project operational by 2030, but the high capital requirements and uncertain market demand present ongoing challenges.
Asian stock markets fell sharply on Friday, with technology shares leading the decline as investors reassessed valuations after a recent rally.
Asian stock markets fell sharply on Friday, with technology shares leading the decline as investors reassessed valuations after a recent rally. The benchmark Kospi index in South Korea dropped 5.8% and triggered a 20‑minute trading halt after an 8% intraday decline activated its circuit breaker, the third such halt this week and the fifth this year. Japan's Nikkei 225 fell more than 4%, and SoftBank's share price dropped 12.5% amid broader concerns about technology valuations. Other regional indexes in Taiwan and mainland China also posted steep declines. In the United States, Apple shares dropped 6% on Thursday, the largest one‑day fall in more than a year, and Microsoft's shares fell after it announced higher Xbox console prices citing higher component costs. Traders said they are re‑evaluating tech stock valuations, noting that higher costs may curb device demand and slow semiconductor sales. Analyst Raymond Woo of Kyoto University Innovation Capital warned that rising commercialisation costs for AI tools are being passed to consumers, raising doubts about whether demand will keep pace with investment. David Makaryan, senior partner at Alpha Pacific Group, said the long‑term case for AI remains compelling but investors are becoming more selective about which companies can justify current valuations. The market volatility underscores ongoing uncertainty about the sustainability of high‑priced technology stocks as investors await clearer evidence of demand matching capital expenditure.
Apple said the electronics industry is facing an unprecedented challenge due to a surge in demand for chips for AI data centers. The company noted that component prices have risen sharply and quickly. Xbox announced that the price of its basic console will increase by $100 to $499 and that the higher‑memory model will rise by $150 to $749, effective August. The company said it had hoped to avoid another price hike but attributed the increase to rising costs of storage and memory, which have more than doubled and are expected to double again by 2027. Xbox previously increased console prices in October by $20 to $70, making new consoles 30% to 40% more expensive than a year earlier. Apple’s price changes affect the MacBook Pro with 1 TB storage, which rose from $1,699 to $1,999, and the entry‑level MacBook Air in the United Kingdom, which increased from £599 to £699 shortly after launch. Tim Cook told the Wall Street Journal in June that price increases were unavoidable because memory chip conditions are unsustainable. Analysts said Apple’s actions illustrate that even the world’s largest technology firms are feeling pressure from rising component costs. Market research firms Counterpoint and Forrester expect other PC and tablet manufacturers to follow suit, either by raising prices, reducing discounts, or shifting focus to premium devices. Valve announced that its planned price for the Steam Machine gaming PC is no longer viable and will launch at £879 in the United Kingdom and $1,049 in the United States.
President Donald Trump announced he has ordered an investigation into major energy companies, saying gasoline prices should be lower after wholesale oil costs fell on global markets. Brent crude rose to almost $120 a barrel in May after Iran closed the Strait of Hormuz, then fell to about $74 a barrel as diplomatic talks progressed. The U.S. average regular gasoline price fell to $3.93 a gallon, down from more than $4 in April. Speaking to reporters in the White House on Wednesday, Trump said the pump price should be about $2.25 a gallon and named Chevron, ExxonMobil, Shell and BP as examples. He instructed the Department of Justice to begin an immediate review. The American Petroleum Institute said fuel prices do not move in lockstep with crude oil and that the industry is working to restore stability. A DOJ spokesperson said the department is reviewing the request but has not confirmed the launch of an investigation. White House officials said Trump's remarks reflect a focus on short‑term market disruptions and that prices are expected to decline if the Iran situation is resolved. API spokesperson Bethany Williams said the sector shares the goal of affordable fuel and highlighted ongoing supply constraints. The investigation remains pending, and gasoline prices are still above pre‑war levels despite the recent decline.