The S&P 500, Dow Jones, and Nasdaq 100 indices have soared to their all-time highs this year, driven by the artificial intelligence supercycle and strong earnings. They have risen by 9%, 6.50%, and 20%, respectively, this year. The rally stalled last week after the Federal Reserve delivered a hawkish decision, with nine officials pointing to higher interest rates this year. Investors are now focused on three key catalysts that will drive US stocks this week.

Micron Quarterly Earnings

Micron is a top player in the High Bandwidth Memory (HBM) industry and is set to release its results on Wednesday. The company has become one of the best-performing stocks after soaring by 845% in the last 12 months and entering the exclusive $1 trillion club. Its business operates in an industry leading in growth, with peers like Sandisk, Western Digital, and Seagate among the top gainers this year. Strong results from Micron could push the S&P 500, Nasdaq 100, and Dow Jones higher, while weak numbers could have the opposite effect. Other companies reporting this week include FedEx, Paychex, and Darden Restaurants.

US and Iran Talks in Switzerland

The US stock market reacted positively to reports that the US and Iran reached an agreement to reopen the Strait of Hormuz last week. This deal initiated a 60-day countdown for the two countries to reach a nuclear agreement. Talks began today in Switzerland, with JD Vance leading the US side. A key risk is the potential restart of the US-Iran war due to the crisis in Lebanon, where Israel and Hezbollah continue to engage in conflict. On Saturday, Iran announced it had closed the Strait of Hormuz to pressure the US to contain Israel. Any developments in these talks will likely have a major impact on the stock market.

Key US Macro Data Will Impact US Stocks

Key macro data from the US will serve as potential catalysts for the S&P 500, Dow Jones, and Nasdaq 100 indices. S&P Global will publish the flash manufacturing and services PMIs on Tuesday, while the Bureau of Economic Analysis will release the final estimate of GDP data on Thursday. The most critical data point is the US Personal Consumption Expenditure (PCE) inflation report on Thursday, which is the Federal Reserve’s preferred inflation gauge. Economists expect the headline and core PCE numbers to have risen in May. These data releases come as US bond yields continue rising following the hawkish Federal Reserve decision, with nine FOMC members hinting at support for rate hikes as inflation remains above 2% for over five years.

U.S. stock futures rose on Thursday, with the Dow Jones, Nasdaq 100, and S&P 500 indices advancing following Tuesday's sharp sell-off. The rebound comes as investors digest the Federal Reserve's decision to hold interest rates steady and look toward resilient economic conditions. The S&P 500 closed down 1.21% at 7,420.10 on Wednesday, marking its worst session in nearly a week, but futures suggest a recovery is underway.

Fed Signals Steady Policy

The Federal Reserve unanimously held the federal funds rate steady at 3.50%-3.75% during its first policy meeting under new Chair Kevin Warsh. The central bank signaled a potentially tighter long-term policy, with the median Fed official projecting the benchmark rate to end 2026 at 3.8%, up from 3.4% in March projections. Warsh announced five task forces to review Fed communications, the balance sheet, data sources, productivity and jobs in the AI era, and the inflation framework itself. Treasury yields reflected this stance, with the 10-year Treasury bond yielding 4.45% and the two-year bond at 4.17%.

Stocks in Focus

Several stocks moved significantly in premarket trading. Freecast Inc. (NASDAQ: CAST) zoomed 87.96% after announcing a reseller agreement for Starlink Business services. Smith & Wesson Brands Inc. (NASDAQ: SWBI) surged 15.37% after posting better-than-expected fourth-quarter results. Safe Bulkers Inc. (NYSE: SB) rose 3.40% following strong first-quarter financial results. Conversely, Sleep Number Corp. (NASDAQ: SNBR) plunged 55.90% as Nasdaq plans to delist its common stock following its Chapter 11 bankruptcy filing.

Market Outlook and Data

Scott Wren, Senior Global Market Strategist at Wells Fargo Investment Institute, expressed optimism for the U.S. economy, noting good GDP growth through the end of next year. While he expects inflation to ease, he cautioned it will remain higher than the Fed desires, likely keeping rates unchanged. Wren favors equities over fixed income, recommending U.S. Large Cap and Mid Cap Equities, particularly in Industrials and Utilities, and anticipates the S&P 500 will reach the 8,600-8,800 range next year.

Investors are awaiting initial jobless claims for the week ending June 13 and June's Philadelphia Fed manufacturing survey. Markets will be closed on Friday for the Juneteenth National Independence Day holiday.