New York, May 13, 2026, 11:03 EDT
Stocks churned in midday trade Wednesday. The Dow shed 0.35% to 49,587.27 and the S&P 500 dipped 0.10% to 7,393.21, both pressured after producer inflation came in hotter than forecast, according to LSEG numbers cited by Reuters. On the other hand, chip names bounced, nudging the Nasdaq up 0.07% to 26,106.67.
This inflation surprise hit just a day after consumer prices picked up again, sending the S&P 500 and Nasdaq off their record peaks and pushing rate-cut bets even further out. Traders, for now, are viewing the Federal Reserve as more of a brake on risk than a backstop.
Producer prices jumped 1.4% in April, marking the sharpest monthly rise since March 2022, according to the Labor Department. Over the past year, the producer price index climbed 6.0%, a level not seen since December 2022.
The Bureau of Labor Statistics reported Tuesday that April’s consumer price index jumped 0.6% from March, putting annual inflation at 3.8%. Energy prices packed the biggest punch, up 17.9% over the year—gasoline alone surged 28.4%.
Traders shifted their bets after the data hit. According to Reuters, CME FedWatch tracked a spike in odds for a Fed rate hike by December—now at 34.3%, sharply higher from just 15% last week. Over on Polymarket, contracts assigned a 30% chance to a rate increase in 2026, while the probability of no cuts at all this year landed at 70%. Kalshi’s Fed contracts, meanwhile, showed “exactly 0 cuts” out in front for 2026 at 63%. Prediction markets like these let traders speculate on outcomes by buying contracts; prices reflect collective sentiment. Reuters Polymarket Polymarket Kalshi
“This is very challenging data,” said Peter Cardillo, chief market economist at Spartan Capital Securities, in comments to Reuters. Kevin Warsh, newly confirmed to the Fed board on Tuesday, probably won’t be quick to cut rates, Cardillo added. Investors have their eyes on Warsh as Jerome Powell’s term wraps up Friday. Reuters
Losses hit most of the S&P 500, but not all corners felt it the same. Out of the 11 major sectors, nine slipped, with utilities weighing heaviest, Reuters reported. The Philadelphia semiconductor index, however, bounced back 1.7% following Tuesday’s chip slump. Nebius Group rocketed 10% after the AI cloud company posted quarterly revenue nearly eight times higher.
The chip rally propped up the Nasdaq, but also highlighted the market’s thinning breadth. Semiconductors have powered the 2026 run: the Philadelphia semiconductor index is up 64% since late March, far outpacing the S&P 500’s nearly 17% advance. Micron Technology and Advanced Micro Devices have each more than doubled in that stretch, Reuters noted.
The concentration has turned into a risk. “You have to wonder if it’s gotten a little too ebullient here,” said Peter Tuz, president of Chase Investment Counsel. Michael O’Rourke over at JonesTrading flagged another concern: with the group carrying so much weight in the S&P 500, even a small disappointment could ripple through the whole market. Reuters
Earnings momentum hasn’t let up. Morgan Stanley bumped its S&P 500 forecast to 8,000 from 7,800, sticking to the view that “it’s an earnings story, not a multiple expansion one.” As of May 8, 83.2% of the 440 S&P 500 names that had posted first-quarter numbers came in ahead of analyst expectations, the firm said, citing LSEG figures. Reuters
The downside risk is now front and center. Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest Wealth Management, pointed out that rising producer prices could eat into margins for firms that can’t offset costs. Brian Jacobsen, chief economist at Annex Wealth Management, added that the energy shock is “more a threat to corporate margins” at this point. Reuters
Wall Street’s usual tug-of-war played out again: big profits and AI bets stacked up against persistent inflation and those stubbornly high rates. Wednesday didn’t tilt the balance—neither camp managed to take charge.
