Dear readers. As volatility in the global financial markets rises ahead of the release of key U.S. economic indicators, today's Daily Stock provides an in-depth analysis of the tight correlation between the U.S. Personal Consumption Expenditures (PCE) price index and Nasdaq multiples.
Key Takeaways
- **Deteriorating Nasdaq Sentiment**: Amid concerns over the Federal Reserve's prolonged monetary tightening stance, Nasdaq's own Fear and Greed Index has dropped to 34.7 (Fear), bringing multiple compression pressure into reality.
- **Sticky Inflation Warning**: Following the rebound of April's Core PCE to 3.3%, the upcoming May PCE indicators scheduled for release on June 25 are also heightening concerns about entrenched inflation.
- **Testing the Multiples Defense Line**: As the Nasdaq 100 12-month Forward P/E faces correction pressure down to the 24.38x level, the earnings sustainability of tech companies has emerged as the key to defending multiples.
[Image: /stdaily/uploads/202606/gen_6a39cd238e4260.39400748.png]
Market Overview
Currently, on an intraday basis (provisional), the Nasdaq Index is hovering around the 26,166.60 level, undergoing a significant process of digesting supply from its peak.
In the domestic market, the KOSPI Index is trading around 9,051.34 points, while the KOSDAQ Index is near 961.17 points. The USD/KRW exchange rate remains at a elevated level of 1,538.00 won.
Looking at the Daily Stock Fear and Greed Index representing market sentiment, the Nasdaq Index currently stands at 34.7 (Fear), a clear contraction compared to 41.6 (Neutral) a week ago and 59 (Neutral) a month ago.
On the other hand, the KOSPI Index currently maintains a level of 52.2 (Neutral), but a slight slowdown in buying sentiment is detected compared to 53.7 a week ago and 58.6 a month ago.
This deterioration in investor sentiment is interpreted as a direct burden on the growth value of tech stocks due to concerns over a prolonged high-interest-rate environment in the U.S. and the rising 10-year Treasury yield (US10Y).
Financial Analysis
Recent trends in the U.S. Personal Consumption Expenditures (PCE) deflator clearly show sticky inflationary pressures.
The April Headline PCE price index, released on May 28, rose 3.8% year-over-year, expanding its gain from the previous month (3.5%).
The Core PCE price index, the Federal Reserve's preferred inflation gauge, also rose 3.3% year-over-year, significantly exceeding the Fed's medium-to-long-term target of 2%.
In particular, the dot plot and Summary of Economic Projections (SEP) released at the June FOMC meeting sent a strong warning signal to the market.
Fed officials significantly raised their year-end 2026 Core PCE inflation projection from 2.7% to 3.3%, officially signaling that inflation will not easily come down.
| Indicator | March 2026 Projection | June 2026 Projection (SEP) | Recent Actual Release (April) |
|---|---|---|---|
| **Headline PCE (YoY)** | 2.7% | 3.2% (Est.) | 3.8% |
| **Core PCE (YoY)** | 2.7% | 3.3% | 3.3% |
| **U.S. Fed Funds Rate (Upper Limit)** | 3.50% ~ 3.75% | Pause expectations strengthen | 3.75% Maintained |
As inflationary pressures intensify, the U.S. Dollar Index (DXY) remains strong, and the Volatility Index (VIX) is also raising its support level amid market tension.
Valuation
A macro environment where high interest rates persist for a long period deals a direct blow to the multiples (P/E ratios) of Nasdaq's high-growth tech stocks.
As of June 2026, the 12-month Forward P/E of the Nasdaq 100 Index has fallen to around 24.38x, moving away from its previous optimistic upper boundaries.
Compared to the S&P 500's Forward P/E of 22.59x at the same point in time, the tech-heavy Nasdaq still commands a premium, but the gap is gradually narrowing.
When interest rates stay high for a longer period, the discount rate for future cash flows rises, reducing the relative attractiveness of high-multiple tech stocks that are highly sensitive to valuation.
However, mega-cap big tech companies such as Nvidia and Microsoft, whose earnings have recently surged due to the expansion of AI infrastructure, are self-defending against multiple compression pressures through robust earnings growth rates.
Conversely, small and mid-cap growth stocks and AI peripheral names, which had seen their multiples skyrocket without solid earnings backing, are suffering the most direct damage from multiple compression caused by high interest rates.
[Image: /stdaily/uploads/202606/gen_6a39cd2ba030f4.22253314.png]
Expert & Institutional Analysis
Major Wall Street institutions predict that the May PCE data to be released on June 25 will be a critical turning point that determines the short-term direction of Nasdaq multiples.
Marko Bjegovic, an analyst at Arkomina Research, suggested the possibility that the May Headline PCE could accelerate to +0.4% MoM and +4.0% YoY.
Furthermore, he predicted that the Core PCE, which shows the underlying trend of inflation, would remain tight, recording +0.3% MoM and +3.4% YoY.
Capital Economics analyzed that the upward trend in detail items of the May Producer Price Index (PPI) is raising Core PCE deflator pressure, potentially pushing annual Core PCE up to 3.5%.
Similarly, the New York Fed's Dynamic Stochastic General Equilibrium (DSGE) model forecasting team admitted in its recent report that the inflation path has shifted higher, revising its short-term inflation outlook from 2.4% to 3.1%.
Experts point out that although there are stabilizing factors in energy prices due to recent easing of tensions in the Middle East, the persistence of services and shelter inflation remains high, meaning the start of the Federal Reserve's rate cuts will inevitably be pushed further back.
Risk Factors
The most critical risk surrounding the Nasdaq market is undoubtedly "disappointment in monetary policy due to sticky inflation."
As the timing of the Fed's monetary easing is delayed, the upward pressure on borrowing costs for companies will accumulate, potentially leading to a slowdown in capital expenditure (CAPEX) plans.
In particular, if the return on investment (ROI) in the AI sector for big tech companies—who are currently pouring vast sums of money into it—is delayed, the downward pressure on multiples could double.
Furthermore, concerns over tariff increases stemming from trade conflicts and supply chain restructuring among major global economies, including the U.S., also act as negative factors that sustain supply-side inflation.
If the May Core PCE data unexpectedly exceeds market expectations, it could lead to an additional spike in treasury yields and a sharp collapse in multiples across growth stocks, necessitating thorough preparation.
Investment Perspective Summary
As market investor sentiment remains in the "Fear (34.7)" zone, taking a phased approach after confirming inflation indicators is more effective than aggressively chasing rallies.
Historically, when macro uncertainty peaks, the market exhibits a "flight to safety" phenomenon, with liquidity concentrating on large-cap, high-quality stocks with the highest earnings reliability.
Therefore, rather than being shaken by short-term indicator fluctuations, a strategy to strengthen the fundamental durability of one's portfolio around the big tech value chain that proves real revenue and margin margins is desirable.
Investor Checklist Q&A
Q1. When will the May PCE price index be released, and why is it important?
A1. The May PCE data will be released on June 25, 2026, at 8:30 AM EST. The market's attention is focused on it because it is the primary inflation gauge referenced by the Fed when making monetary policy decisions.
Q2. What is the difference between Headline PCE and Core PCE?
A2. While Headline PCE measures price changes for all goods and services purchased by consumers, Core PCE excludes highly volatile food and energy components, making it easier to grasp the long-term underlying trend of inflation.
Q3. Why did the Fed raise its Core PCE outlook at the June FOMC meeting?
A3. The year-end 2026 Core PCE outlook was raised from 2.7% to 3.3% as inflation in the services and shelter sectors turned out to be stickier than expected.
Q4. What does the Nasdaq entering 'Fear' (34.7) signify?
A4. It indicates a contraction in investor psychology, meaning that investors are feeling valuation burdens due to prolonged high interest rates and are significantly lowering their expectations for growth stock multiples.
Q5. Which stocks should investors focus on during periods of prolonged high interest rates?
A5. It is advantageous to take a selective approach focusing on mega-cap big tech companies and essential AI hardware companies that have low debt ratios, excellent cash flows, and pricing power based on strong business moats.