US equities turned in a split Wednesday close as a tech-led buying spree overpowered the hottest wholesale inflation print in more than four years. The S&P 500 climbed 43.28 points, or 0.58%, to a fresh record of 7,444.24, while the Nasdaq Composite vaulted 314.14 points, or 1.20%, to 26,402.34. The Dow Jones Industrial Average bucked the trend, slipping 67.17 points, or 0.13%, to 49,693.39 as cyclicals and defensives lagged the megacap tech bid.
PPI shock fails to derail the tape
The session opened on the defensive after the Bureau of Labor Statistics reported that the April producer price index jumped 1.4% month over month — the biggest monthly gain since March 2022 and nearly triple the 0.5% rise economists had penciled in. The print landed one day after a sticky April CPI report and reignited concerns that the disinflation glide path has stalled.
Yet by mid-morning, dip buyers reasserted control of the tape. The S&P 500 ground out a new all-time intraday high as traders rotated decisively into chips and large-cap tech, brushing aside the inflation read and a renewed back-up in front-end Treasury yields.
Semiconductors do the heavy lifting
Chip stocks did most of the work. Nvidia advanced more than 2%, Micron Technology gained more than 3%, and the VanEck Semiconductor ETF (SMH) climbed 2% on the day. The breadth was narrow — the gains were concentrated in a familiar handful of AI-leveraged names — but it was enough to push the broad market into the green and keep the Nasdaq's leadership streak intact.
The split close also underscored the structural divide that has defined the May tape: a Dow weighed down by rate-sensitive cyclicals and industrial bellwethers, set against a Nasdaq powered by secular AI demand and an apparent willingness among institutional buyers to look through near-term inflation noise.
Inflation overhang into next week
The records came against an awkward macro backdrop. With CPI running at 3.8% year over year and PPI now printing well above forecasts, fed funds futures continued to price out the remaining rate cuts on the curve for 2026 and have begun flirting with a non-trivial probability of a hike later in the year. Bond traders pushed the front end higher even as equities marched on.
For now, equity investors appear content to treat the inflation flare-up as a story for the bond market to resolve. The question heading into Thursday's session — which brings retail sales, jobless claims, and a fresh batch of regional Fed manufacturing surveys — is whether the tech-led tape can keep absorbing hotter data, or whether the Dow's quiet slide is the early signal that breadth is finally beginning to crack.
For long-only allocators, the message of the past two sessions has been consistent: even as the Fed's hand is being forced toward a more hawkish posture, the AI capex cycle remains the dominant flow story, and dip-buyers continue to show up where it counts.
Sources: CNBC, Yahoo Finance, TheStreet, 24/7 Wall St.