ORLANDO, Florida, May 28 (Reuters) - The S&P 500 and Nasdaq forged new record highs on Thursday, and the dollar and Treasury yields fell after the U.S. and Iran agreed to extend their ceasefire, while investors also digested the latest U.S. inflation and revised economic growth figures.

In my column today, I look at the wedge between core PCE and CPI inflation in the U.S., a rare phenomenon but one that is likely to become more entrenched in the coming months. This would be a potential headache for new Fed Chairman Kevin Warsh.

If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.

1. US first-quarter GDP growth revised lower to 1.6% pace

2. US inflation firming as Iran war drives up prices

3. Trump Fed pivot raises dollar-policy doubts too: Mike Dolan

4. Anthropic secures $965 billion valuation after raising $65 billion

5. EXCLUSIVE-China works on AI token futures market, sources say, in race with US

Today's Key Market Moves

-- STOCKS: Key benchmarks in Asia, Europe, UK all down by as much as 1%. US-Iran truce extension lifts Wall Street. In the last two months, S&P 500 is up 20%, Nasdaq up 30%.

-- SECTORS/SHARES: Six S&P 500 sectors fall, five rise. Tech +1.3%, utilities -1.1%. Dell +19% after results, Dollar Tree ( DLTR ) +18%, Agilent ( A ) +17%, Best Buy ( BBY ) +16%. Synopsys -9%.

-- FX: Dollar -0.2%, pulling USD/JPY further back from 160.00. NZD again biggest G10 climber, ZAR biggest EM gainer.

-- BONDS: Treasury yields fall as much as 3 bps, U.S. curve bull flattens.

-- COMMODITIES/METALS: Oil hits 6-week low, gold +1%.

Today's Talking Points

* Stagflation

Key U.S. economic data on Thursday neatly encapsulated where the world's largest economy is right now -- accelerating inflation and soft growth. Policymakers and consumers are right to be concerned, and talk of "stagflation" will percolate.

Prices are expected to continue rising, lifted by the AI capex boom and energy shock. AI spending may support growth, as will the "wealth effect" from high asset prices. But it's no guarantee, and if growth and employment turn lower, the Fed will be in a bind.

* Exiled on Main Street

Zooming out, Thursday's data highlighted the contrasting fortunes between businesses and consumers. Corporate profit growth slowed in Q1 but profitability remained near record highs, while the savings rate in April fell to just 2.6%. It has been lower in only one month in the past 18 years.

In crude terms, Wall Street has rarely been in better shape, while Main Street is struggling to keep its head above water. How sustainable is this? Cue renewed debate over the 'K-shaped' economy, wealth taxes, capital vs labor, and inequality.

* AI smokescreen?

The AI boom continues to inspire intense debate. Behind record-high stock markets, there is deep skepticism among many investors that the trillions of dollars of AI capex will be matched by sufficient demand, which will lead to huge over-spending and over-capacity.

Microsoft ( MSFT ) is cutting internal Claude code licenses because they are too expensive, Uber ( UBER ) has already burned through its 2026 AI coding budget, and there are much cheaper alternatives coming out of Asia. Few people doubt AI's transformative power. But has too much investment been brought forward too soon?

What could move markets tomorrow?

-- Developments in the Middle East

-- Japan retail sales (April)

-- Japan industrial production (April)

-- Japan Tokyo CPI inflation (May)

-- Taiwan GDP (Q1, revised)

-- European Central Bank board member Fabio Panetta speaks

-- Germany CPI inflation (May, prelim)

-- Bank of Canada publishes summary of discussion at May policy meeting

-- Canada GDP (Q1)

-- Brazil GDP (Q1)

-- U.S. Chicago PMI (May)

-- U.S. trade (April)

-- U.S. Federal Reserve officials scheduled to speak include Minneapolis Fed President Neel Kashkari, San Francisco Fed President Mary Daly, and Philadelphia Fed President Anna Paulson

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