Micron Technology reported fiscal Q3 revenue of $41.5 billion, beating expectations by 17%. South Korea's Kospi jumped more than 5% after Monday's crash. Brent erased every gain made since the Iran war began. Bitcoin briefly touched $59,023 before recovering toward $61,500. May core PCE rose 3.4%, matching expectations.
MARKET PULSE
The AI trade got the answer it wanted.
Micron Technology (MU) reported one of the strongest quarters in its history. Revenue reached $41.46 billion, nearly $6 billion above expectations. Gross margin hit a record 84.9%. Adjusted earnings came in at $25.11 per share. The company guided next quarter's revenue to about $50 billion with margins near 86%.
The message reached Asia immediately.
South Korea's Kospi jumped more than 5%, reversing much of Monday's 10% collapse. SK Hynix climbed more than 10%. Samsung Electronics and Kioxia also rallied as investors returned to AI memory suppliers.
U.S. futures followed. Nasdaq 100 futures rose about 1.8%. S&P 500 futures gained 0.6%. The 10-year Treasury yield slipped below 4.40% as oil continued falling.
Then inflation arrived.
May headline PCE rose 4.1% year over year from 3.8% in April. Core PCE increased 3.4%, matching expectations. Monthly headline PCE rose 0.4%, while core increased 0.3%. Personal income and spending both climbed 0.7%, showing consumers are still spending despite higher rates.
The Signal
Micron (MU) confirmed AI demand remains structural. PCE confirmed inflation remains sticky. The market now has two strong stories pulling in opposite directions
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ENERGY
The war premium has disappeared.
Brent below $72.50 and WTI under $70 have erased every gain made since the Iran war began, now sitting more than 40% below the wartime peak above $120.
The recovery is becoming physical.
Tankers are again moving through the Strait of Hormuz with tracking systems active. UAE exports have recovered to roughly 85% of prewar levels. Brent's prompt spread has moved into contango, showing near-term supply is no longer scarce.
Inventories remain tight.
U.S. crude stocks are near their lowest level since 1984 and Cushing inventories remain near operational minimums. But international supply is returning faster than expected.
Lower oil changes the inflation outlook.
If energy prices remain here, headline inflation should continue easing, reducing pressure on Federal Reserve Chairman Kevin Warsh to tighten policy further.
Energy Signal
Oil has removed its wartime premium. The inflation shock is fading from the outside in.
MACRO
The inflation report did not settle the debate.
Headline PCE rose 4.1% year over year in May, while core PCE increased 3.4%, both matching expectations. Monthly headline PCE rose 0.4% and core increased 0.3%.
Consumer demand remained firm.
Personal income and personal spending both climbed 0.7%, beating forecasts and showing households continue spending despite elevated borrowing costs.
That gives the Federal Reserve room to stay patient.
The report was not hot enough to force another hike immediately. It was not soft enough to remove one either. The Dollar Index briefly slipped before recovering near 101.65 as traders continued pricing a meaningful chance of another rate increase.
Goldman Sachs still expects its first rate cut in mid-2027. Bank of America continues forecasting three hikes this year. Before the report, markets priced roughly a 65% chance of at least one quarter-point hike by September. This report keeps that possibility alive.
Macro Signal
Oil has removed one inflation driver. Consumer demand has not. Today's PCE keeps the Fed's hawkish path firmly on the table.
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CAPITAL
The memory cycle keeps accelerating.
SK Hynix confirmed plans to raise about $29.4 billion through a Nasdaq ADR listing, one of the largest U.S. equity offerings ever. The company controls roughly 60% of the high-bandwidth memory market and remains Nvidia's (NVDA) largest memory supplier.
Micron's guidance strengthens that story.
Management said memory shortages should continue beyond 2027 as AI server demand keeps outpacing supply.
Meanwhile, SpaceX (SPCX) has become the warning.
After rallying from its $135 IPO price to more than $225, shares have fallen roughly 35%, erasing more than $600 billion in market value. The stock remains well above its IPO price, but investors are becoming more selective after the initial excitement.
Capital Signal
Micron proved AI demand is real. SK Hynix is raising capital into that demand. SpaceX reminds investors that price still matters.
CRYPTO PULSE
Bitcoin briefly lost another major level.
Bitcoin traded as low as $59,023 overnight, its weakest level since October 2024, before recovering toward $61,500. Nearly $1 billion in futures positions were liquidated, including roughly $430 million in bitcoin longs.
The rebound followed Micron's earnings, not crypto news.
The larger trend remains unchanged.
Spot bitcoin ETFs have now recorded roughly $3 billion of June outflows and six consecutive weeks of net withdrawals. Strategy (MSTR) continues facing pressure as CryptoQuant warns that weaker STRC preferred shares reduce the company's flexibility to fund additional bitcoin purchases.
Friday brings another test.
About $10.6 billion of bitcoin options expire on Deribit, making it one of the largest quarterly expiries of the year.
The Verdict
Bitcoin bounced with technology stocks, but ETF flows remain negative. Friday's options expiry is the next major test before July begins.
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CLOSING LENS
The market received exactly what it wanted from Micron.
AI demand is still accelerating. Memory remains sold out. Supply is still not catching up.
The inflation story was different.
PCE matched expectations, but it did not deliver the relief investors wanted. Inflation remains above target, and consumers continue spending. That gives the Fed little reason to change course quickly.
Oil has erased its wartime gains.
Micron strengthened the AI story.
PCE kept the policy debate alive.
The market now has one powerful force pushing growth higher and another keeping interest rates elevated.
That balance will define the rest of the summer
