On the 13th, local time, on the U.S. New York stock market, the S&P 500 index, centered on large-cap stocks, and the tech-heavy Nasdaq hit a record high after shaking off the shock of rising prices. Mega tech companies that play the role of bellwethers led gains across the market on expectations for strength in the artificial intelligence industry. However, concerns about rising rates stemming from inflation anxiety and the fallout from the Iran war acted at the same time, and the Dow Jones Industrial Average, which groups traditional blue chips, inched lower to close.
On the New York Stock Exchange, the S&P 500 rose 43.29 points from the previous session. It gained 0.58% to 7,444.25, setting new intraday and closing record highs. The Nasdaq also jumped 1.2% to close at 26,402.34, breaking its all-time record. By contrast, the Dow Jones Industrial Average fell 67.36 points, or 0.14%, to finish at 49,693.20.
The U.S. Bureau of Labor Statistics said the producer price index in April surged 1.4% from the previous month. It was the biggest monthly increase since March 2022. That nearly tripled the 0.5% forecast compiled by Dow Jones. The annual rise from a year earlier was 6%, the highest since December 2022, marking a record high.
The producer price index is an indicator that shows the expense that corporations incur when producing goods. When production expense increases, corporations eventually pass that burden on to consumer prices. Clark Belin of asset management firm Bellwether Wealth noted that producers are directly feeling the spillover effects of high oil prices, which have topped $100 per barrel. Belin went on to warn that the U.S. Federal Reserve faces a serious inflation problem. Boston Federal Reserve President Susan Collins also emphasized, "The protracted Iran war could influence price increases for a long time." Collins said, "For the time being, we can imagine maintaining the current interest rate level or even tightening policy further."
Even as bad news poured in, Wall Street investors snapped up artificial intelligence-related stocks. Ross Mayfield, an investment strategist at investment firm Baird, told CNBC, an economic news outlet, that "semiconductor transactions have taken on a life of their own." It is interpreted to mean that, even amid oil price shocks and global geopolitical crises, investors see tech stocks as the safest haven because the explosive growth of the artificial intelligence industry is considered a foregone conclusion.
News that U.S. President Donald Trump was accompanied by Nvidia CEO Jensen Huang, the leading artificial intelligence semiconductor bellwether, on his trip to China to meet Chinese President Xi Jinping poured fuel on the frenzy. The market interpreted this as a positive signal that the U.S. government could allow Nvidia to sell artificial intelligence semiconductors in the China market. Nvidia shares rose more than 2%.
Riding Nvidia's gains, other tech stocks also soared across the board. Micron Technology rose more than 4%, and Apple, for the first time ever intraday, topped $300 per share to hit $300.49 before settling at $298.87, up 1.38% from the previous day. Cisco Systems, a telecommunications equipment company, reported results that beat market expectations along with positive guidance, sending its stock up 11%.
By contrast, sectors sensitive to interest rate changes were hit hard. Utilities, which operate essential infrastructure such as electricity and gas, fell 1.26%, the biggest decline among S&P 500 sectors that day. Utility corporations need to borrow heavily for large-scale infrastructure investment, so when yields on Government Bonds rise, funding expense increases and profitability worsens. China's giant tech corporation Alibaba also said its core profit plunged 84% from a year earlier due to increased spending on e-commerce and tech investment, sending its stock down about 1.3%.
Experts were split on the market outlook. Mike Wilson, chief strategist at Morgan Stanley, said a strong macroeconomy and stellar corporate earnings would extend the bull market and predicted the Standard & Poor's 500 would reach 8,300 within the next 12 months. Max Kettner at HSBC Holdings also analyzed that the recovery in corporate profits offsets the threat of rising Government Bond yields.
But some warned against excessive optimism. Research firm Wolfe Research said the stock market feels like it has reached a short-term peak and that it is past time for tech stocks to catch their breath. Strategist Ross Mayfield also projected that if the macro environment deteriorates seriously, investors will eventually sell stocks to lock in profits, so the recent rally will not continue indefinitely.