The market shakes off hot inflation data

We got a blistery April Consumer Price Index (CPI) number, driven successful a large mode by vigor costs, but adjacent halfway CPI was amazingly high, driven by a leap successful structure costs for the archetypal clip successful a while. The April Producer Price Index (PPI) was adjacent further supra estimates.

On May 12th, the marketplace staged a meaningful pullback aft the CPI people but was successful betterment mode by midday connected the 13th, with a large bounce successful semiconductors and the Dow closing successful the green.

Interest rates roseate materially. The PPI print, which near the year-over-year (YoY) header PPI astatine a precise uncomfortable +6.0%, the highest since February 2023, has had a overmuch much muted impact.

The full marketplace dipped into the reddish connected the PPI print, but the NASDAQ and S&P were backmost successful the greenish aft the archetypal hr of trading. Semiconductors, the QQQ, and the Magnificent 7 finished trading connected the 13th successful the green, portion the Dow and adjacent value S&P 500 were lone down slightly. This marketplace wants to commercialized up, adjacent with a 30-year U.S. Treasury output supra 5%, the highest since January 2023.

U.S. Treasury yields are inching higher connected the backmost of the inflation data, but not arsenic overmuch arsenic 1 would expect. The 10-year is present supra 4.45%, portion the 2-year is supra 4%. Kevin Warsh, present the caller Chairman of the Fed, can't deliberation of making a near-term chopped successful the Fed Funds rate. The Fed cannot chopped cardinal involvement rates portion Treasury yields rise, truthful if this gets worse, Treasury Secretary Bessent and incoming Fed Chairman Kevin Warsh whitethorn person to instrumentality immoderate bonzer action to get yields little successful the upcoming months.

Related: Hot ostentation study throws acold h2o connected Fed complaint cuts

Tech is redeeming the marketplace erstwhile again

Tech and connection services are firmly successful the green. The lone different assemblage not successful the reddish is basal materials, arsenic precious metals are up crossed the board, led by silver +17.3% successful a month, copper +11.4% successful a period to yet different all-time high. Gold is really down 1.7% successful the past month, not having the concern request of the different two.

Helping the enthusiasm for tech is Trump's meeting successful China, wherever the different participants, similar NVIDIA (NVDA) CEO Jensen Huang and Tesla (TSLA) CEO Elon Musk, are seeing their stocks rally powerfully contiguous successful hopes of caller concern deals. NVIDIA has deed a caller all-time high, up +20% successful a month, present worthy implicit $5.5 trillion.

The higher involvement rates are causing harm successful existent property and dividend stocks. The winning sectors contiguous are maturation and momentum, which means AI plays. Traditional utilities are down, but alternate powerfulness suppliers are up. It's an AI market, and it's leaving non-AI names successful the rearview mirror.