S&P 500 and Nasdaq 100 Post New Record Highs on Chip Stock Strength

The S&P 500 Index ($SPX) (SPY) on Wednesday closed up +0.58%, the Dow Jones Industrial Average ($DOWI) (DIA) closed down -0.14%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.04%.  June E-mini S&P futures (ESM26) rose +0.62%, and June E-mini Nasdaq futures (NQM26) rose +1.09%.

Stock indexes settled mostly higher on Wednesday, with the S&P 500 and Nasdaq 100 posting new record highs.  Gains in processor and memory chipmakers, the key drivers of the recent rally in the artificial intelligence trade, led stock gainers on Wednesday.  Nvidia, Tesla, and Apple all rallied to lead the Magnificent Seven technology stocks higher after the CEOs of the companies joined President Trump on his visit to China, bolstering optimism that this week’s summit between Mr. Trump and China’s Xi Jinping could lead to a series of trade deals, especially around semiconductors. 

Stock indexes rallied on Wednesday despite a stronger-than-expected US Apr PPI report that showed a resurgence in inflation, pushing bond yields higher and may prompt the Fed to keep interest rates higher for longer.  The 10-year T-note yield rose to a 10-month high of 4.50% on Wednesday.  Weakness in software stocks on Wednesday kept the Dow Jones Industrial Average in negative territory.

US Apr PPI final demand rose +1.4% m/m and +6.0% y/y, stronger than expectations of +0.5% m/m and +4.8% y/y, with the +6.0% y/y jump being the largest in 3.25 years.  Also, Apr PPI ex-food and energy rose +0.6% m/m and +5.2% y/y, stronger than expectations of +0.3% m/m and +4.3% y/y, with the +5.2% y/y gain being the largest in 3.25 years.

US MBA mortgage applications rose +1.7% in the week ended May 8, with the purchase mortgage sub-index up +3.9% and the refinancing mortgage sub-index down -0.8%.  The average 30-year fixed rate mortgage rose +1 bp to 6.46% from 6.45% in the prior week.

WTI crude oil prices (CLM26) fell from a 1-week high on Wednesday and closed down more than -1%.  The International Energy Agency (IEA) said in a monthly report on Wednesday that global oil inventories declined at a rate of about 4 million bpd in March and April, and the market will remain “severely undersupplied” until October even if the conflict ends next month.  The Strait of Hormuz remains essentially closed, as about a fifth of the world’s oil and liquefied natural gas transits through the strait.  Goldman Sachs estimates that the current disruption has drawn down nearly 500 million bbl from global crude stockpiles, with the drawdown potentially reaching 1 billion bbl by June.

The markets are discounting a 3% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.

Earnings reports thus far in this reporting season have been supportive of stocks.  As of Wednesday, 83% of the 454 S&P 500 companies that reported Q1 earnings have beaten estimates.  Q1 S&P 500 earnings are projected to climb +12% y/y, according to Bloomberg Intelligence.  Stripping out the technology sector, Q1 earnings are projected to increase around +3%, the weakest in two years.

Overseas stock markets settled higher on Wednesday.  The Euro Stoxx 50 recovered from a 1-week low and closed up +0.91%.  China's Shanghai Composite rallied to a nearly 11-year high and closed up +0.67%. Japan's Nikkei Stock Average closed up +0.84%.

Interest Rates

June 10-year T-notes (ZNM6) on Wednesday closed down -1 tick.  The 10-year T-note yield rose +1.5 bp to 4.478%.  Jun T-notes fell to a 1.5-month low on Wednesday, and the 10-year T-note yield jumped to a 10-month high of 4.500%.  T-notes came under pressure on Wednesday after US April producer prices rose more than expected, a hawkish factor for Fed policy.  Also, rising inflation expectations are bearish for T-notes as the 10-year breakeven inflation rate rose to a 1-week high of 2.513% on Wednesday. In addition, weak demand for the Treasury’s $25 billion auction of 30-year T-bonds weighed on T-notes, as the auction had a bid-to-cover ratio of 2.30, well below the 10-auction average of 2.40.

European government bond yields finished lower on Wednesday.  The 10-year German Bund yield fell from a 1.5-week high of 3.116% and finished down by -0.1 bp to 3.100%.  The 10-year UK gilt yield fell -3.7 bp to 5.065%.

Eurozone Mar industrial production rose +0.2% m/m, weaker than expectations of +0.3% m/m.

ECB Governing Council member Olli Rehn warned that recent data are starting to point to stagflation as a result of the Iran war and rising energy prices, saying, "The first signs were already visible in the statistics, when growth in the Eurozone in the first quarter was only slightly positive, and inflation accelerated to 3%."

Swaps are discounting an 84% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Chipmakers rose on Wednesday in hopes that this week’s summit between President Trump and China’s Xi Jinping could lead to a series of trade deals, especially around semiconductors.  ON Semiconductor (ON) closed up more than +9%, and Marvell Technology (MRVL) closed up more than +7% to lead gainers in the Nasdaq 100.  Also, ARM Holdings Plc (ARM) closed up more than +6%, and Micron Technology (MU) closed up more than +4%.  In addition, Analog Devices (ADI), Texas Instruments (TXN), and ASML Holding NV (ASML) closed up more than +3%, and KLA Corp (KLAC) and Lam Research (LRCX) closed up more than +2%.

Most of the Magnificent Seven technology stocks rallied on Wednesday, providing support to the overall market.  Alphabet (GOOGL) closed up more than +3%, and Meta Platforms (META), Nvidia (NVDA), and Tesla (TSLA) closed up more than +2%.  Also, Apple (AAPL) and Amazon.com (AMZN) closed up more than +1%.

Software stocks were under pressure on Wednesday, weighing on the Dow Jones Industrials.  Atlassian Corp (TEAM) closed down more than -5%, and Intuit (INTU) and Palantir Technologies (PLTR) closed down more than -4%.  Also, Salesforce (CRM) closed down more than -3% to lead losers in the Dow Jones Industrials, and ServiceNow (NOW) and Adobe Systems (ADBE) closed down more than -2%.  In addition, Autodesk (ADSK) and Workday (WDAY) closed down by more than -1%, and Microsoft (MSFT) closed down -0.63%. 

Nebius Group NV (NBIS) closed up more than +15% after reporting Q1 revenue of $399.0 million, stronger than the consensus of $391.6 million. 

Ford Motor (F) closed up more than +13% to lead gainers in the S&P 500 after Morgan Stanley said there’s a fairly high likelihood that Ford signs an energy storage system supply agreement with large commercial customers, and potentially hyperscalers, over the next few months.

Corcept Therapeutics (CORT) closed up more than +11% after UBS upgraded the stock to buy from neutral with a price target of $72. 

Sensata Technologies Holding Plc (ST) closed up more than +8% after Truist Securities upgraded the stock to buy from hold with a price target of $58. 

Akamai Technologies (AKAM) closed up more than +7% after Bank of America Global Research upgraded the stock to buy from neutral with a price target of $175.

Hewlett Packard Enterprise (HPE) closed up more than +6% after Semafor said that more activist investors, including Irenic Capital, have taken stakes in the company. 

Wix.com (WIX) closed down more than -27% after reporting Q1 adjusted gross margin of 66%, below the consensus of 67.8%.

Birkenstock Holdings Plc (BIRK) closed down more than -12% after reporting Q2 operating profit of 155.5 million euros, below the consensus of 168.1 million euros. 

Dynatrace (DT) closed down more than -11% after forecasting Q1 adjusted EPS of 44 cents to 45 cents, weaker than the consensus of 45 cents.   

American Electric Power (AEP) closed down more than -3% after announcing the commencement of a registered underwritten offering of $2.6 billion of shares of its common stock. 

MercadoLibre (MELI) closed down more than -1% after Citigroup downgraded the stock to neutral from buy.

Earnings Reports(5/14/2026)

Applied Materials Inc (AMAT), Bullish (BLSH), Fermi Inc (FRMI), Globant SA (GLOB), Liberty Live Holdings Inc (LLYVA), NIQ Global Intelligence Plc (NIQ), NU Holdings Ltd/Cayman Islands (NU), Versant Media Group Inc (VSNT), Viking Holdings Ltd (VIK), YETI Holdings Inc (YETI).