At midday on Wednesday, U.S. stocks showed a split performance, with the Dow Jones Industrial Average falling more than 200 points. Gains in chip stocks propelled the Nasdaq higher. The U.S. Producer Price Index (PPI) for April surged 6% year-over-year, marking the largest increase since 2022, indicating rising inflationary pressures in the United States. Following the PPI report, U.S. Treasury yields rose to a 10-month high.
Specifically, the Dow dropped 228.45 points, or 0.46%, to 49,532.11; the Nasdaq gained 215.93 points, or 0.83%, to 26,304.13; and the S&P 500 added 23.57 points, or 0.32%, to 7,424.53.
Technology stocks outperformed other market sectors, while inflation concerns stemming from rising energy prices due to the Iran war weighed on other sectors such as retail and banking. NVIDIA's stock rose over 1%. Advanced Micro Devices (AMD) gained 1%, and Micron Technology increased by more than 5%. The VanEck Semiconductor ETF advanced 1%.
It was reported that NVIDIA's CEO, Jensen Huang, accompanied U.S. President Trump on his visit to China.
Adam Crisafulli of Vital Knowledge noted: "His last-minute addition to Trump's China trip has reignited investor interest in tech stocks, following Tuesday's decline which had left the market hoping for a breakthrough with the H200 chip. That the CEO of the world's largest company is accompanying his nation's president on a key geopolitical visit should surprise no one and is hardly a reason to buy back into chip stocks, but the sector's recent performance has not been rational."
Against the backdrop of renewed enthusiasm for artificial intelligence (AI) trading, semiconductor stocks have recently surged significantly, leading the broader market back toward record highs.
Of course, the S&P 500 and Nasdaq had retreated from their all-time highs on Tuesday after U.S. consumer inflation data came in higher than expected.
On Wednesday, investors received another inflation metric—the April Producer Price Index. In April 2026, U.S. wholesale prices recorded their highest annual increase in over three years, signaling a more severe inflation outlook as cost pressures intensify upstream in the supply chain.
Data released by the U.S. Bureau of Labor Statistics on Wednesday showed the seasonally adjusted Producer Price Index (PPI) rose 1.4% month-over-month, significantly surpassing the 0.5% increase expected by economists surveyed by Dow Jones and exceeding the revised 0.7% monthly gain in March. This marks the largest monthly increase since March 2022.
Year-over-year, the PPI increased by 6%, the highest rate since December 2022. Excluding food and energy, the core PPI rose 1% month-over-month, above the expected 0.4%. Excluding food, energy, and trade services, the PPI increased 0.6% month-over-month.
Energy prices were the primary driver behind the larger-than-expected surge in producer prices, also serving as a core factor in the spike in the consumer price index reported by the Bureau of Labor Statistics on Tuesday.
According to the Bureau of Labor Statistics, approximately three-quarters of the increase in goods prices within the PPI came from a 7.8% surge in final demand energy prices. Over 40% of that increase stemmed from a 15.6% jump in gasoline prices—as the U.S.-Israel conflict with Iran that month disrupted global energy markets, pushing U.S. retail gasoline prices above $4 per gallon.
Although this round of inflation is widely attributed to the U.S.-Israel war with Iran and tariffs imposed by the Trump administration a year ago, the PPI data indicates that price pressures have become more widespread.
The services price index accelerated, rising 1.2% month-over-month, the largest monthly increase since March 2022. Two-thirds of that increase came from a 2.7% rise in trade services prices, suggesting tariff costs may be starting to have a greater impact on end prices; a 3.5% surge in wholesale margins for machinery and equipment further pushed up the services price index.
Chris Rupkey, Chief Economist at FWDBONDS, stated: "Fed officials can only sigh at today's report because, regardless of who chairs the Fed, now is not the time for the central bank to consider interest rates, no matter how much Trump 2.0's economic officials might wish otherwise. Producers are seeing more inflation, which means consumers will see more inflation soon—it's just a matter of time. That much is certain."
Despite Tuesday's pullback in tech stocks, AI trading overall remains a primary market driver this year. Olaolu Aganga, Head of Portfolio Construction at Citi Wealth, believes AI spending is expanding beyond the technology sector, creating room for investors to buy into other market opportunities.
She said: "We look at the global landscape and see these trends as enduring and long-term, such as energy security and infrastructure—companies that can benefit from capital expenditures related to energy, the grid, and energy independence. So if you missed this wave, frankly, there are other themes we believe will unfold over time, which we need to watch, and we consider these areas to have similarly sustainable profitability."
Comments