New York—May 13, 2026, 16:01 EDT
- S&P 500 and Nasdaq finished at record highs, while the Dow edged lower.
- Producer prices surged 1.4% in April—marking the sharpest monthly increase since March 2022.
- With prediction markets leaning toward a longer pause, traders are dialing back expectations for Fed cuts.
Chipmakers and AI stocks sent the S&P 500 and Nasdaq Composite surging to new closing highs Wednesday, shrugging off a hotter inflation print that rattled some nerves. The S&P 500 tacked on 0.58% to finish at 7,444.14, with the Nasdaq advancing 1.21% to 26,404.74. Dow Jones Industrial Average lagged behind, sliding 0.13% to 49,693.63, according to preliminary figures.
The action was notable: investors kept backing big tech’s earnings narrative, despite worsening rate signals. Still, it wasn’t a straightforward risk-on session. The wider market contended with new evidence that inflation is creeping past just energy.
The Producer Price Index climbed 1.4% in April, according to the Labor Department’s Bureau of Labor Statistics—marking the steepest monthly gain since March 2022. On an annual basis, the index jumped 6.0%. Services made up close to 60% of the increase for the month. Goods prices advanced 2.0%, with gasoline soaring 15.6%.
The shift dented rate-cut wagers. UBS Global Wealth Management now projects its next Fed rate trim for December 2026, with another in March 2027—a notable delay from its earlier call for September and December cuts this year. Traders pegged the odds of the Fed standing pat in September at 87.4%, according to CME FedWatch data cited by Reuters.
Prediction markets weren’t budging either. Over on Polymarket, traders priced in a 98% chance the Fed holds rates steady at its June 17 meeting. Another contract on the site pegged the probability of no rate cuts through 2026 at roughly 69%, while a single cut was getting just 17%.
Tech stayed firm. “Technology remains resilient,” Ryan Detrick, chief market strategist at Carson Group, said to Reuters. He pointed out that chip stocks “came soaring back” after Tuesday’s drop. Six of the Magnificent Seven AI-linked megacaps ended higher. MarketScreener
Geopolitical tension lent fresh fuel to the rally. President Donald Trump landed in Beijing alongside Nvidia CEO Jensen Huang and Elon Musk, just ahead of a two-day summit with Chinese President Xi Jinping. According to Reuters, the discussions were set to center on giving U.S. firms greater access in China and holding together a delicate trade truce. In the backdrop, China’s warnings about Taiwan and looming U.S. chipmaker curbs stayed unresolved.
Morgan Stanley bumped its S&P 500 target for 2026 up to 8,000, compared to its earlier 7,800 call. The firm described its move as driven by “earnings story, not a multiple expansion one.” Analysts pointed to AI-fueled efficiency, solid pricing power, and a sturdy first-quarter profit showing as factors behind the increase. Reuters
AI stocks stole the spotlight again. Shares in Nebius Group surged, fueled by the AI cloud player’s disclosure of quarterly revenue jumping almost eightfold. EchoStar gained too, after the company secured Federal Communications Commission sign-off for a $40 billion spectrum deal with SpaceX and AT&T. On the downside, Coinbase and Strategy both retreated as bitcoin and ether prices softened.
Traders are piling into one side of the market even as sticky inflation keeps the Fed on the sidelines. “I would just be careful” with high rates and drawn-out inflation, said Jim Baird, chief investment officer at Plante Moran Financial Advisors, in comments to Reuters. The latest PPI data, he said, only strengthens the case for the Fed to stay put. Boston Fed President Susan Collins echoed that sentiment, warning a rate hike isn’t off the table if inflation doesn’t let up. MarketScreener
Investors leaned into chips rather than rates, and that pushed indexes to new highs. But if inflation data keeps coming in like this, that may not cut it next time.
