U.S. stock markets faced a sharp sell-off on Wednesday after an unexpectedly strong Producer Price Index (PPI) report escalated fears that the Federal Reserve will keep interest rates elevated for longer. The Dow Jones Industrial Average fell 230 points (0.46%), while the S&P 500 slipped 0.04%. The tech-heavy Nasdaq Composite managed a 0.3% gain, supported by a rebound in semiconductor shares.
The Bureau of Labor Statistics reported that the PPI surged 1.4% in April—the largest monthly jump since March 2022—dwarfing economists’ expectations of a 0.5% increase. On an annual basis, wholesale prices climbed 6%, the highest since December 2022, exceeding the 4.9% consensus. The data followed the previous day’s hotter‑than‑expected consumer inflation print, which pushed the annual CPI to 3.8%.
Treasury yields soared to 10‑month highs as traders priced in roughly 11 basis points of additional Federal Reserve tightening by December, up from 9.3 basis points before the report. The two‑day inflation shock reinforced expectations that the Fed will maintain a restrictive stance, especially amid a leadership transition—the Senate confirmed Kevin Warsh to the Board on Tuesday and may approve him as chair as soon as Wednesday, with current Chair Jerome Powell’s term expiring Friday.
Technology stocks stabilized after a major sell-off, with Nvidia climbing over 2.4% and Micron Technology jumping 4.5%. The recovery was partly fueled by Nvidia CEO Jensen Huang’s participation in President Donald Trump’s delegation to China for a summit with Xi Jinping. Meanwhile, oil prices edged lower but remained elevated due to the Iran conflict, which continues to threaten fuel and transportation costs. Investors now turn to upcoming U.S. retail sales data for signs that rising energy prices are weighing on consumer spending.
