U.S. equity index futures edged higher, building on a recent rally led by technology stocks that propelled the S&P 500 and Nasdaq 100 to record closing levels. The S&P 500 finished the session up 0.6% at 7,444, while the Nasdaq 100 gained 1% to close at 29,366. In contrast, the Dow 30 experienced a slight decline of 0.1% to 49,693, and the Russell 2000 remained flat at 2,843. Treasury yields retreated from their intraday peaks but held firm at elevated levels as bond traders absorbed the implications of another inflation report that exceeded expectations. Market pricing, as tracked by CME's FedWatch tool, currently indicates a strong likelihood of the Federal Reserve maintaining its current interest rate throughout the year, with a significant probability of rate hikes anticipated for the following year. This sentiment was further influenced by the Senate's confirmation of Kevin Warsh as the next Federal Reserve chair.
The semiconductor sector saw notable gains, with shares of Nvidia (NASDAQ: NVDA) rising 2.3%. This surge was partly attributed to news that CEO Jensen Huang had been invited to accompany President Trump on a trip to China. The positive sentiment extended across many companies in the semiconductor industry. Micron (NASDAQ: MU) climbed 4.8%, Marvell Technology advanced 8.2%, ON Semiconductor rose 11.1%, Coherent gained 7.9%, Lumentum was up 3.8%, and Corning added 4.2%. However, AMD experienced a minor setback, declining 0.6% following a downgrade from buy to hold by Daiwa, which cited valuation concerns. In the electric vehicle (EV) space, Tesla (NASDAQ: TSLA) shares increased by 2.7%. This followed gains in other key EV manufacturers, with Nio jumping 7.6% on news of its battery swap technology and Lucid rising 6.3% due to recent ownership disclosures. Legacy automaker Ford also posted a substantial gain of 13.2%, driven by optimism surrounding its energy storage business.
Apple (NASDAQ: AAPL) shares reached a significant milestone, touching $300 per share for the first time. Akamai Technologies (+7.7%) experienced a notable surge after Bank of America upgraded the stock to buy and raised its price target. Johnson & Johnson (+2.8%) also advanced, as Leerink Partners upgraded the pharmaceutical giant to outperform. Cisco (NASDAQ: CSCO) shares demonstrated remarkable strength, jumping 19.8% in after-hours trading following a strong performance that exceeded expectations in earnings, revenue, and future guidance. The AI cloud company Nebius reported an impressive year-over-year revenue growth exceeding 680%, leading to a stellar session with its shares soaring 15.7%. EchoStar gained 3% after the Federal Communications Commission (FCC) approved its $40 billion wireless spectrum sale to AT&T and SpaceX.
Conversely, Birkenstock faced a challenging trading session, with its shares tumbling 12.9% after the company missed both earnings and revenue expectations. The company attributed these shortfalls to the ongoing conflict impacting its growth trajectory. Among the meme stock movers, Kohl’s fell 5.1%, GoPro dropped 3.1%, and Opendoor declined 2.8%. Nokia, however, saw a significant increase of 11.7%. In the cryptocurrency-related stock sector, Coinbase (-2.8%), MicroStrategy (-3.5%), Mara Holdings (+0.2%), Gemini Space Station (-2.8%), Bullish (-2.3%), and Circle Internet Group (+2.4%) experienced mixed performance.
Gold prices hovered around $4.7K, influenced by hotter-than-expected U.S. producer price data. This data reinforced expectations of prolonged higher interest rates, which in turn bolstered the U.S. dollar and kept Treasury yields elevated. Both factors are typically negative for non-yielding assets like gold. Silver, however, showed resilience, briefly reaching $89 before paring some gains, which caused the gold/silver ratio to dip into the 52s. Oil prices, specifically West Texas Intermediate (WTI), approached $100 per barrel as traders braced for continued volatility due to ongoing disruptions. The Energy Information Administration (EIA) reported larger-than-expected draws in both crude oil (-4.3 million barrels) and gasoline (-4.1 million barrels), with a modest build in distillates (+0.2 million barrels). OPEC, in its Monthly Oil Market Report (MOMR), revised its global oil demand growth forecast downward to approximately 1.2 million barrels per day (bpd) from a previous estimate of 1.4 million bpd, though it anticipates stronger growth of 1.5 million bpd next year. The International Energy Agency (IEA) highlighted that supply losses originating from the Strait of Hormuz are depleting global oil inventories at an unprecedented pace, projecting further demand destruction.
Bitcoin experienced a consecutive pullback, falling below $80,000 amid a broader risk-off sentiment driven by persistent inflation and higher-for-longer interest rate expectations. The cryptocurrency briefly exited its recent bull channel, though it found support near a short-term level. Ether's decline was more contained, remaining below $2.2K. The U.S. Dollar Index strengthened further, trading within the 98 handle, as elevated inflation data fueled bets on further rate hikes. USD/JPY exhibited volatility, retreating from the 158 level, while the pullback in GBP/USD was less pronounced, briefly dipping below 1.35.
Federal Reserve officials voiced concerns regarding the persistent inflation. Governor Collins indicated that further monetary tightening might be necessary if inflation pressures do not abate, and that the Fed's patience in overlooking supply shocks has diminished. Governor Kashkari stated that inflation remains too high, identifying the closure of the Strait of Hormuz as a significant upside risk and noting that the Iran shock has disrupted the inflation environment. Meanwhile, the European Central Bank (ECB) signaled potential policy adjustments in response to economic conditions. ECB's Rehn suggested that economic data is beginning to point towards stagflation, while Villeroy emphasized the ECB's readiness to counteract second-round inflation effects. Lane indicated that the oil shock might necessitate a firmer or more prolonged restrictive monetary policy response. In the United Kingdom, Bank of England's Mann warned that tighter monetary policy could trigger volatility and potentially lead to tighter domestic financial conditions than intended.
Client sentiment data compiled by Capital.com revealed shifts in market positioning across various asset classes. In the equity markets, sentiment for the Nasdaq 100 moved to neutral from a slight buy, as price gains led some long traders to unwind their positions. The Dow 30 saw an increase in buy sentiment, reaching a heavy buy level of 65% from 62% previously. Sentiment for the Nikkei 225 and Hang Seng indices decreased, moving from a majority buy to a lower majority buy (56% from 63%) and remaining at a high majority buy (75% from 83%), respectively. The retreat in the ASX 200 saw traders move into extreme long territory, reaching 91% of positions. In commodities, gold sentiment remained at an extreme buy (78%) despite relatively sedate intraday price movements, and silver maintained a heavy long bias, though down slightly to 73% from 75% the previous day. WTI crude oil sentiment shifted from a slight sell to a slight buy (53%) as new short positions were quickly unwound during the recent pullback.
In foreign exchange (FX) markets, EUR/USD sentiment shifted to a majority buy (57% from 54%), while USD/JPY moved to neutral from a slight buy as it approached the 157 level. AUD/USD sentiment also shifted, moving from a majority short to neutral. Economic data released included U.S. April producer prices, which surged to 6% year-over-year from 4.3% in the prior period, significantly exceeding forecasts with a month-over-month growth of 1.4%, the highest in over four years. Core readings also came in higher than anticipated, with the year-over-year increase at 5.2% and the month-over-month increase at 1%. In the Eurozone, preliminary Q1 Gross Domestic Product (GDP) was confirmed at 0.1% quarter-over-quarter, in line with expectations. March industrial production rose 0.2% month-over-month, slightly below the previous month's figure of 0.3%.
Upcoming economic events scheduled for May 14, 2026, include the release of U.S. retail sales data, trade pricing information, and weekly jobless claims at 4:30 pm Dubai time. Speeches from Federal Open Market Committee (FOMC) members are also anticipated. A key geopolitical event is the scheduled meeting between U.S. President Trump and Chinese President Xi. Corporate earnings reports are expected from Applied Materials and Ross Stores. Additionally, preliminary UK GDP figures and other economic data are scheduled for release at 10 am. The market is closely monitoring these developments for their potential impact on investor sentiment and the broader economic outlook. The ongoing geopolitical tensions, particularly concerning the Strait of Hormuz, continue to be a significant factor influencing energy markets and overall economic stability. The interplay between inflation data, central bank policy expectations, and corporate performance will likely dictate market movements in the short to medium term. Investors are navigating a complex environment characterized by supply-side shocks and shifting monetary policy stances across major economies. The resilience of certain sectors, such as technology and energy storage, contrasts with the challenges faced by others, impacted by inflation and potential economic slowdowns. The market's reaction to these diverse factors will be crucial in shaping investment strategies and asset allocation decisions in the coming weeks and months. The confirmation of Kevin Warsh as the new Fed chair adds another layer of anticipation regarding future monetary policy direction.
