Alphabet and Tesla climbed 2.6% and 3.6%, respectively. The Philadelphia SE Semiconductor index was last up 2.3% and testing a new record high, bouncing back from a selloff in the previous session.
US producer prices increased more than expected in April, posting their biggest gain since early 2022, the latest indication that inflation was accelerating amid the war with Iran.
The data comes a day after US consumer inflation posted the sharpest increase in three years in April and knocked the S&P 500 and the Nasdaq from their record highs.
“Frankly, inflation pressures were already percolating before the Iran conflict, and while much of the damage can be undone if we get a quick resolution, today’s PPI print is a reminder of the level and intensity of the coming price pressures at the consumer level,” said Steve Wyett, chief investment strategist at BOK Financial.
Traders now expect the Fed to stay on hold all through the year and a 34.3% chance of a rate hike by December, compared with an around 15% chance seen a week ago, according to the CME FedWatch Tool.
Markets are expecting a potentially more hawkish central bank under Kevin Warsh, whom the Senate confirmed to the board on Tuesday and could move to approve as chair as soon as Wednesday. Jerome Powell’s term ends on Friday.
Meanwhile, President Donald Trump landed in Beijing accompanied by an entourage that included Nvidia’s Jensen Huang and Elon Musk, after pledging to urge China’s Xi Jinping to “open up” to US business at the start of their two-day summit.
Trump had said ahead of the high-stakes summit that he did not expect to ask Xi to help resolve the conflict with Tehran.
Wall Street has been wary that a prolonged conflict could keep energy prices elevated, adding to inflationary pressures and complicating the US Federal Reserve’s policy decisions.
At 11.18 am ET, the Dow Jones Industrial Average fell 268.56 points, or 0.53%, to 49,494.88, the S&P 500 gained 13.33 points, or 0.18%, to 7,414.29 and the Nasdaq Composite gained 185.49 points, or 0.71%, to 26,274.14.
Seven of the eleven main S&P 500 sectors traded in the red, with the S&P 500 utilities sector leading declines with a 1.7% fall.
Among other movers, Nebius Group jumped 15.9% after the AI cloud firm reported a nearly eightfold rise in quarterly revenue.
Morgan Stanley raised its annual target for the S&P 500 index to 8,000 from 7,800, saying US stocks have enough room to rally as companies continue to post strong earnings.
Declining issues outnumbered advancers by a 1.77-to-1 ratio on the NYSE and by a 1.35-to-1 ratio on the Nasdaq.
The S&P 500 posted 23 new 52-week highs and 44 new lows while the Nasdaq Composite recorded 79 new highs and 163 new lows.