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More hot inflation data meant a cold open for stocks, but optimism about the long-term potential of the artificial intelligence (AI) revolution and the near-term promise of a U.S.-China summit lifted two of the three main equity indexes into the green on Wednesday.
A day after the April CPI report showed consumer prices rose at their fastest rate since 2023, the Bureau of Labor Statistics (BLS) reported the quickest pace of increase for producer prices since 2022. According to the BLS, the Producer Price Index (PPI) was up 1.4% in April, accelerating from 0.7% in March and above a consensus forecast of 0.5%. PPI was up 6.0% on an annualized basis. Core PPI was up 1.0% month over month, topping an estimate of 0.4%.
“Today’s report suggests that while the move higher in prices received by producers is primarily being driven by energy,” William Blair economist Richard de Chazal observes, “we are also seeing a broader increase across other core components of the inflation basket.” As de Chazal notes, energy prices rose 7.8% because of the war in Iran.
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Semiconductor prices are also moving higher due to elevated demand, as well as capacity constraints unrelated to the Strait of Hormuz. “If semiconductors are now the ‘new oil’ — in the sense that they are a critical input into a wide range of goods — this is a concerning development for central bankers and limits their ability to look through the energy spike as a one-off shock,” the economist concludes.
Meanwhile, the Senate voted to confirm Kevin Warsh as the next Fed chair, with Jerome Powell’s term set to expire. The Senate approved Warsh for a seat on the Federal Reserve’s Board of Governors on Tuesday.
Warsh will be challenged to fulfill Trump’s wish for lower interest rates following a better-than-expected April jobs report and this week’s hot inflation data. But there are three things Warsh can do to change the Fed.
Nvidia goes to China
Nvidia (NVDA, +2.3%) CEO Jensen Huang is among the C-suite executives who traveled with President Donald Trump to China for a summit with President Xi Jinping this week for discussions that will include major issues such as the ongoing war in the Middle East and the global semiconductor market.
Tesla (TSLA, +2.7%) CEO Elon Musk is also in China with the president, as the market prepares for a SpaceX initial public offering (IPO) that looks like it’ll rocket past all previous similar capital-raising ventures.
Alphabet (GOOGL, +3.9%) CEO Sundar Pichai isn’t in China with Trump, but the search giant’s share price is seeing some upside based on its approximately 6% stake in SpaceX.
Indeed, Alphabet has surpassed Apple (AAPL, +1.4%) for the No. 2 spot in the global market cap rankings, though outgoing CEO Tim Cook is aboard for what looks like his last foreign junket.
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Boeing (BA, +1.6%) is getting a boost on hope CEO Kelly Ortberg can close a deal to sell as many as 500 737 Max aircraft to the Middle Kingdom, with a little help from the White House.
By the closing bell, the tech-heavy Nasdaq Composite was up 1.2% at 26,402, and the broad-based S&P 500 had added 0.6% to 7,444, but the blue-chip Dow Jones Industrial Average was down 0.1% at 49,693.
MMM stock has good optics
In addition to declaring its quarterly payout and underscoring its standing as a blue-chip dividend-paying stock, 3M (MMM, +2.7%) has joined a group of tech companies to collaborate on “open, interoperable specifications for expanded beam optical (EBO) connectivity in AI infrastructure.”
According to 3M, “Expanded beam optical technology is increasingly seen as a critical enabler for AI infrastructure, offering advantages in reliability, ease of maintenance, and performance in high-density environments.”
AI hyperscalers Meta Platforms (META, +2.3%) and Oracle (ORCL, +4.7%), as well as Advanced Micro Devices (AMD, -0.6%) and Cisco Systems (CSCO, +2.6%), are among the parties signed on to the multi-source agreement (MSA).
3M will pay a quarterly dividend of 78 cents per share on June 12. That payout is up 6.8% from 73 cents a year ago. The company has paid dividends to its shareholders without interruption for more than 100 years.
NXT is making data from the Sun
Nextpower (NXT, +8.8%) surged to a new all-time high after management of the industrial stock reported expectations-beating fiscal 2026 fourth-quarter earnings and raised its fiscal 2027 revenue guidance.
Nextpower makes software that helps utility-scale solar projects track the Sun during its daily transit and optimize electricity generation. And its backlog has grown to more than $5 billion due to rising demand for power from data centers.
“We view this quarter as another solid proof point of NXT’s diversification strategy,” Susquehanna analysts Charles Minervino and Eric Clay write, “as it continues to get more traction on its bundled offerings and expands its product portfolio through its ‘everything but the panel’ approach.”
The analysts reiterated their Positive (Buy) rating and raised their 12-month target price for NXT from $136 to $161 on more backlog growth in 2026, “particularly as the company rolls out more verti