Those buying the dip looked forward to a positive outcome of the summit between US President Donald Trump and Chinese President Xi Jinping, overlooking the hotter-than-expected inflation print.
US Markets On Thursday
The S&P 500 gained 0.6% on Wednesday, while the Nasdaq rallied 1.2%. The former made a record high of 7,460 intraday, while for the Nasdaq, that figure stood at 26,474. The Dow Jones ended below the flat line, underperforming its peers, but not before a 240-point recovery from the lows of the day.
Despite the rally in the S&P 500, nearly two-thirds of the index constituents ended with losses in mid-week trading, re-confirming the poor market breadth and the fact that the rally has been led by a handful of stocks.
Trump-Xi Meet
US President Donald Trump is set to meet his Chinese counterpart Xi Jinping soon in Beijing where rare earths, AI, Iran, Taiwan and Tariffs are going to be hotly discussed.
According to reports, both leaders may also announce a large Chinese order of US planes or purchase of Soybean from US farmers.
Ahead of the trip, US President Donald Trump wrote on Truth Social that he expects “great things” to come out of the summit.
Investors Ignore Inflation
Buyers in the stock market completely put behind the hotter-than-expected wholesale inflation print, which followed a hotter-than-expected retail inflation print too.
For April, the Producer Price Index went up by 1.4% month-on-month, compared to consensus estimates of a 0.5% increase and higher than the 0.7% revised figure from March.
On an annualized basis, April PPI rose by 6%, the biggest increase since December 2022. Services inflation also increased by 1.2%, the biggest monthly increase since March 2022.
Oil Consolidates
Oil prices saw some minor profit booking but remains around the $105 a barrel mark, even as the International Energy Agency warned that prices may rise further during peak summer demand. Rapidly depleting inventories could add further pressure to the market, as per IEA’s monthly briefing report.
According to Morgan Stanley, the market will lose another billion barrels over 2026 due to time required to restore normalcy.
