TL;DR

  • US stocks rebounded to session highs around midday Thursday even after the Federal Reserve's preferred inflation gauge hit a near three-year high, helped by a cooler core reading and reports of progress toward extending the US-Iran ceasefire.
  • Core PCE rose 0.2% in April and 3.3% from a year ago, in line with forecasts, while headline PCE climbed to 3.8%, the highest since May 2023.
  • Technology led the advance, with Microsoft, AMD, Palantir, and IBM among the gainers, while energy names such as Chevron and ExxonMobil lagged as oil pared earlier gains.
  • The reversal reflects a market leaning on in-line core inflation and easing energy-shock fears rather than the alarming headline number.

What happened

The US stock rebound took hold around midday on Thursday, May 28, 2026. The S&P 500 was up about 0.5% and pushing to an intraday high. The Nasdaq Composite gained roughly 0.6%, while the Dow Jones Industrial Average added around 17 points and was little changed, a sign that the bounce was concentrated in larger growth names rather than spread evenly across the market.

Stocks reached their session highs after Axios reported that US and Iranian negotiators had agreed on a 60-day memorandum of understanding, a preliminary and non-binding framework, to extend the current ceasefire and continue talks on Iran's nuclear program. President Donald Trump has not yet given the agreement final approval, so the framework remains a report rather than a confirmed deal.

The move came on the same morning the Bureau of Economic Analysis released the April personal consumption expenditures (PCE) price index, the inflation measure the Fed watches most closely.

Why the US stock rebound took hold

Two forces help explain why equities shrugged off a hot headline number.

First, the detail inside the inflation report was less alarming than the top line. Headline PCE rose 0.4% on the month and 3.8% over the year, the fastest annual pace since May 2023, largely because the recent energy shock tied to the Iran conflict pushed fuel costs higher. Core PCE, which strips out volatile food and energy prices to show the underlying trend, rose just 0.2% on the month and 3.3% on the year. Both figures matched what economists expected. For traders, an in-line core print lowers the risk of a fresh hawkish surprise from the Fed under new Chair Kevin Warsh, who was sworn in on May 22.

Second, the reported progress on the Iran ceasefire framework eased the energy-driven part of the inflation story. As oil pared its earlier gains, the market read the headline PCE spike as a backward-looking, energy-led move that may fade rather than as a sign of broad, sticky inflation.

Spending data added nuance. Personal income was essentially flat in April while spending rose 0.5%, and the personal saving rate fell to 2.6%, the lowest since June 2022. That tells traders consumers are still spending, but increasingly by drawing down savings, a dynamic worth watching for later-quarter demand.

Implications for traders

For equity traders, leadership matters as much as direction. Technology and other rate-sensitive growth names led the bounce, with Microsoft, AMD, Palantir, and IBM among the standouts, extending the artificial intelligence theme that drove recent record highs. Energy was the clear laggard as Chevron and ExxonMobil gave back earlier gains alongside softer oil.

For index futures traders, the session is a reminder that headline data and live geopolitical headlines can pull price in opposite directions within minutes. A hot PCE print initially pressured futures, but the ceasefire report and in-line core reading flipped sentiment intraday. That kind of two-way volatility tends to reward patience over chasing the first move.

In our internal practice logs at chartdojo.io, a common pattern shows traders reacting to the headline inflation number, entering on the first spike, and then getting caught when the market re-prices on the detail minutes later. Sessions like this one favor waiting for the second, confirmed move.

Potential positives vs negatives

Positives

  • Core inflation came in as expected, lowering the odds of a hawkish Fed surprise in the near term.
  • Reported ceasefire progress could ease the energy shock that has been feeding headline inflation.
  • Broadening technology leadership supports the existing AI-driven uptrend.

Negatives

  • Headline PCE at 3.8% keeps overall inflation uncomfortably high and limits the Fed's room to cut rates.
  • The Iran framework is unconfirmed and still needs Trump's approval; any breakdown could push oil and volatility higher again.
  • A falling saving rate suggests consumer spending may be running on borrowed time.

What could happen from here

Base case. Stocks hold recent gains in a choppy range while traders wait for ceasefire confirmation and the next round of data. This is confirmed if the S&P 500 stays above the prior week's range and oil keeps drifting lower. It is invalidated if the ceasefire report is walked back.

Upside case. Trump approves the framework, oil falls further, and easing energy prices pull headline inflation expectations down, supporting a continued tech-led push toward new highs. This is confirmed by a formal deal announcement and a sustained drop in crude. It is invalidated by renewed strikes or a hawkish Fed signal.

Downside case. The ceasefire framework collapses, or core inflation re-accelerates in the next report, reviving rate-cut doubts and pressuring growth stocks. This is confirmed by a jump in oil back toward recent highs or a hotter core reading next month. It is invalidated by a confirmed deal paired with cooler data.

What traders should watch next

  • Official word from the White House on whether Trump approves the 60-day Iran memorandum.
  • Oil prices (Brent and WTI) as the cleanest real-time read on the energy-shock risk.
  • Commentary from Fed Chair Kevin Warsh and other officials for the rate-path tone after a 3.8% headline print.
  • Whether tech leadership (Microsoft, AMD, Palantir, IBM) broadens or narrows in the coming sessions.
  • The next consumer data for early signs that the falling saving rate is starting to crimp spending.

FAQ

Why did stocks rise even though inflation hit a near three-year high?

The headline 3.8% rate was driven largely by energy costs, while core inflation came in as expected at 3.3%. Markets also took encouragement from reported progress on the Iran ceasefire, which could ease energy prices over time.

Is the US-Iran ceasefire deal confirmed?

No. Reports describe a 60-day memorandum of understanding reached by negotiators, but it still awaits President Trump's approval and should be treated as a developing situation, not a finalized agreement.

Sources

This article is educational analysis and not financial advice. Sessions like this, when a hot headline reverses into a tech-led rebound, separate disciplined traders from reactive ones. At ChartDojo you can practice reading these setups in a risk-free environment and get AI-powered feedback on every decision, so you build real skills, not bad habits. Start a free trial at chartdojo.io/register.