Good Afternoon. The April Producer Price Index landed even hotter than yesterday's CPI: a 1.4% monthly increase, the largest since March 2022. Logic says this should have piled on Tuesday's selloff. Instead, Wall Street did the opposite. The S&P 500 set a new record and the Nasdaq Composite reclaimed its high, powered by a chip-led rebound: Nvidia gained 2.5% as CEO Jensen Huang boarded Air Force.

—Rosie, Wyatt, Evan & Conor

🔥 What’s Hot: 🔥

🥶 What’s Not: 🥶

1. April PPI Up 1.4% -- Hottest Wholesale Inflation Reading in Four Years

The News: The Bureau of Labor Statistics reported that the Producer Price Index for final demand increased 1.4% in April, the largest monthly advance since March 2022 and well above the 0.5% consensus. The 12-month change rose to 6.0%, the steepest annual gain since December 2022. Core PPI (excluding food, energy, and trade services) rose 0.6% on the month and 4.4% on the year -- the hottest core read since February 2023. Services accounted for nearly 60% of the headline rise, with final demand goods up 2.0% on the month.

Why It Matters: For investors, the back-to-back hot CPI and PPI confirm an inflation reacceleration that the Fed cannot ignore -- the bond market has now fully priced out 2026 rate cuts. For consumers, wholesale prices flow into retail prices over a 60-90 day window. Expect a rougher Independence Day shopping cycle and another leg of grocery-aisle frustration.

What to Watch: Thursday's retail sales and import-price data, Friday's Michigan sentiment, and Powell's May 20 farewell speech for any leadership-transition language on the inflation framework.

Source: BLS

2. Stocks Set New Records Despite Hot PPI -- Nasdaq Leads on Chip Rebound

The News: The S&P 500 set a fresh record close above 7,440 Wednesday afternoon, and the Nasdaq Composite reclaimed its all-time high, both reversing Tuesday's CPI-driven decline. Nvidia gained 2.5%, Qualcomm and Micron recovered most of Tuesday's losses, and Akamai, Nebius, and AMD all featured among the biggest midday movers. Breadth was negative -- more NYSE stocks declined than advanced -- as the rally concentrated in mega-cap tech.

Why It Matters: For investors, this is a textbook narrow-leadership reading: when the top 10 stocks contribute essentially all the index gains while the rest of the market is flat to down, you have to ask whether the index level is signaling broad strength or just AI concentration risk. The S&P 500's top 10 names now command nearly 39% of index weight, the highest concentration on record. For consumers, the wealth-effect headline does not match the back-office reality of a more mixed market.

What to Watch: Equal-weighted S&P versus market-cap-weighted spread, Russell 2000 relative performance, and whether the Magnificent Seven hold leadership through Nvidia's May 20 earnings.

Source: CNBC

3. AMD Gets the Split: BofA Hikes Target to $500, Daiwa Downgrades on Valuation

The News: Wall Street split Wednesday on AMD. Bank of America's Vivek Arya raised his price target to $500 from $450 and reiterated a Buy rating, citing what BofA estimates as a $1.7 trillion AI data center opportunity by 2030. Daiwa's Louis Miscioscia downgraded AMD to Outperform from Buy -- while simultaneously doubling his price target to $500 from $250 -- citing a 150% rally over the past 60 days and a trailing P/E of 154x. AMD closed Tuesday at $448.29, up roughly 109% year-to-date.

Why It Matters: For investors, the Daiwa downgrade is the cleanest valuation flag the chip rally has received this cycle -- a 65x forward P/E with no fundamental disagreement is the textbook "great company, expensive stock" moment. Pair it with Cisco earnings tonight and AMAT tomorrow, and you have the cleanest setup for a meaningful chip-sector pullback if results disappoint. For consumers, none of this changes the underlying AI infrastructure build-out -- it just changes whether AMD shareholders share in the upside or absorb the multiple compression.

What to Watch: Cisco's after-close earnings (consensus revenue $15.55B, EPS $1.03) and AMAT's release Thursday post-close for any commentary on memory and logic capex.

Source: 24/7 Wall Street

4. Alibaba Climbs 7% Despite Profit Pressure as Quick Commerce Scales

The News: Alibaba (BABA) gained roughly 7% Wednesday after reporting fiscal Q4 results showing revenue up 11% year-over-year to RMB 243.4 billion, though that fell short of consensus. GAAP net income surged 96% to RMB 23.5 billion on equity-investment mark-to-market gains. Adjusted EBITDA fell 84% as AI infrastructure investment and quick-commerce spending compressed margins. Cloud Intelligence Group revenue grew above 40%, and management projected annualized recurring revenue for AI model and application services to exceed RMB 30 billion by year-end.

Why It Matters: For investors, this is the cleanest "China-AI capex" read of the cycle. Alibaba is trading the same playbook Amazon ran from 2014-2018: take margins down today, win infrastructure share tomorrow. With Jensen Huang in Beijing this week, expect more headlines on Chinese-domestic AI silicon partnerships. For consumers, Alibaba's quick-commerce scale -- orders running at 2.7x last year's level -- is reshaping urban Chinese retail in ways that Western investors are still underweighting.

What to Watch: Friday's Trump-Xi joint statement and any commentary on Nvidia export-license access for Chinese hyperscalers. Alibaba's October fiscal-Q1 release will be the first read on whether margins inflect.

Source: Yahoo Finance

5. Cisco Reports After the Close -- Options Pricing 8% Move

The News: Cisco Systems (CSCO) reports fiscal Q3 results after Wednesday's close, with consensus revenue at $15.55 billion (up 10% year-over-year) and EPS at $1.03. Options markets are pricing an 8% post-earnings move in either direction, suggesting potential range of $91 to $107 versus Monday's $99 close. The Splunk acquisition and Cisco's AI networking pivot remain the two most-watched line items.

Why It Matters: For investors, Cisco's AI networking commentary will color the data-center capex narrative ahead of Nvidia's May 20 report. The company has spent two years trying to convince Wall Street it can monetize the AI infrastructure build-out as effectively as Arista or Marvell. A strong Splunk attach rate would validate the strategic premise; a soft outlook would crystallize the "old infrastructure" discount. For consumers and enterprise IT buyers, Cisco's commentary will set tone on 2027 IT budget guidance.

What to Watch: Splunk integration progress, AI infrastructure order backlog updates, and full-year EPS guidance. The $107 strike is the upper bound options are pricing.

Source: Investopedia

6. Trump Arrives in Beijing -- First U.S. State Visit Since 2017 Underway

The News: President Trump landed in Beijing Wednesday morning local time for his first state visit with President Xi Jinping since 2017, accompanied by a 16-CEO delegation. The day-one bilateral covered Iran and the Hormuz crisis, Taiwan, and trade. Working-level officials drafted overnight a "Board of Trade" framework announcement, and Chinese state media reported Trump and Xi signed initial commercial agreements after the first session. The substantive day-two session occurs Thursday in Beijing.

Why It Matters: For investors, day-one optics have been better than expected -- both sides described the opening session as "constructive." Chinese ADRs have gained 4-7% in the run-up, and KWEB closed above its 200-day moving average for the first time since November. For consumers, even a partial tariff-suspension extension framework lowers the holiday-season inflation tail.

What to Watch: Friday's joint statement, the specific Boeing order numbers, rare-earth export-license language, and any Taiwan-related rhetorical adjustments. A handshake on Iran cooperation would be the wildcard upside.

Source: PBS NewsHour

7. Iran Signals Willingness to Return to Peace Talks -- Oil Slips

The News: Iranian state media reported Wednesday that Tehran is open to returning to the negotiating table on the U.S. peace proposal, walking back Sunday's response that President Trump called "totally unacceptable." West Texas Intermediate crude slipped 0.8% to $97.50 per barrel, and Brent fell to $103.50 -- the first session of crude declines since the rejection. The Strait of Hormuz traffic remained at normalized levels through midweek.

Why It Matters: For investors, the modest crude pullback validates the thesis that this conflict has now structurally repriced oil $10-12 higher per barrel versus pre-war levels, with the new range looking like $90-105 rather than $80-95. Energy equities have started to factor in that floor. For consumers, the U.S. retail gasoline average has stopped rising at $4.50 and may start drifting lower if the talks resume. Memorial Day driving relief is still possible.

What to Watch: Iranian official confirmation through Foreign Minister Araghchi by week's end, any Strait of Hormuz incidents, and OPEC+ production guidance heading into the June 1 ministerial.

Source: AP News

8. UK Wage Growth Slows -- Bank of England Cut Path Reopens

The News: UK Office for National Statistics data Tuesday showed regular pay growth slowing to 4.6% in March from 4.9% in February -- the slowest pace since mid-2025. The unemployment rate held at 4.4%. Markets immediately rerated BoE rate-cut odds for August upward, with the OIS curve now pricing a 70% probability of a 25 basis point cut versus 45% before the data. Sterling slipped 0.4% against the dollar to $1.288.

Why It Matters: For investors, the UK's wage-led inflation story has been the cleanest divergence from the U.S. picture. A BoE cut in August, with the Fed on hold through 2026, opens a sustained sterling-dollar weakness trade -- bullish for UK exporters and FTSE 100 dividend yielders. For consumers, the UK has higher chances of a mortgage-cost relief cycle than U.S. households this year.

What to Watch: May 22 UK CPI, the BoE's June 18 meeting and any forward-guidance update, and whether sterling weakness invites Treasury verbal intervention.

Source: Reuters

Q: Why did the fireman wear red suspenders?

A: To keep his pants up.

The extra yield investors demand to hold a long-dated Treasury bond instead of rolling shorter-term Treasuries -- compensation for inflation uncertainty, supply risk, and the chance that future interest rates move adversely. When the term premium rises, long-dated yields can climb even as short-term rate expectations stay flat -- exactly what is happening this week.

Usage: "The 30-year Treasury yield jumped 12 basis points on the hot PPI even though Fed funds expectations barely budged -- almost all of the move was a rising term premium as inflation-tail risk got repriced."

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