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Stocks continued to climb on Tuesday as a key inflation report came in much lighter than expected and tech stocks extended an impressive rebound. This helped offset lingering worries over the war in Iran and a disappointing start to first-quarter earnings season.
Ahead of the opening bell, the Bureau of Labor Statistics said the Producer Price Index (PPI), which measures what businesses are charging suppliers for goods, rose 0.5% from February to March, much slower than the 1.1% economists expected.
According to the BLS, higher energy costs were the biggest catalyst behind the PPI’s increase, with the gasoline index up 15.7% and diesel prices surging 42.7%.
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Core PPI, which excludes volatile food and energy costs, was up 0.1% on a monthly basis, below the 0.5% increase economists anticipated.
“Overall, this report supports the view that inflation remains under control,” say Eugenio J. Alemán, Ph.D., chief economist, and Giampiero Fuentes, economist at Raymond James. “If geopolitical tensions, particularly involving Iran, prove short-lived and energy prices ease in the coming months, it would reinforce the case for the Federal Reserve to implement one rate cut later this year.”
Energy prices retreated today as market participants priced in expectations the U.S. and Iran will head back to the negotiating table sooner rather than later. Front-month West Texas Intermediate crude futures fell nearly 8% to $91.28 per barrel — their lowest settlement since late March.
Nasdaq closes higher for the 10th straight day
As for stocks, the tech-heavy Nasdaq Composite posted its 10th straight gain — its longest daily win streak since 2021 — adding 2.0% to 23,639. The broader S&P 500 rose 1.2% to 6,967 and the blue-chip Dow Jones Industrial Average tacked on 0.7% to 48,535.
Strong days for several mega-cap tech- and tech-adjacent names created tailwinds for the main indexes, with Amazon (AMZN, +3.8%), Nvidia (NVDA, +3.8%) and Alphabet (GOOGL, +3.6%) among those gaining ground.
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Chip stocks also kept climbing today. Indeed, the iShares Semiconductor ETF (SOXX), whose top holdings include Broadcom (AVGO, +0.3%) and Micron Technology (MU, +9.2%), rose 2.0%. This is the tech ETF‘s tenth consecutive win — the longest such streak since October 2017.
JPMorgan, Wells Fargo fall after earnings
Big bank earnings remained in focus on Tuesday. JPMorgan Chase (JPM) beat on both the top and bottom lines for its first quarter, but shares slipped -0.8% after the financial giant cut its full-year outlook for net interest income, a key measure of bank earnings.
Nevertheless, the company’s leadership in high-margin, high-growth areas such as trading and investment banking put it in a strong position “to continue to take market share over the next several quarters,” says Brian Mulberry, chief market strategist at Zacks Investment Management.
Wells Fargo (WFC) also fell after earnings, shedding 5.7% as the big bank reported lower-than-expected first-quarter revenue and net interest income.
Still, earnings per share came in above estimates. And Mulberry feels the results show “healthy balance sheet expansion in spite of” lingering macro headwinds, including higher-for-longer interest rates.
Is a major airline merger in the works?
Elsewhere on Wall Street, buzz is starting to build that a major airline merger could be in the works.
According to Bloomberg, United Airlines (UAL, +2.1%) CEO Scott Kirby reportedly approached members of the Trump administration earlier this year about potentially combining with fellow air carrier American Airlines Group (AAL, +8.0%).
Neither company has commented on the rumors, but such a merger would likely face a massive regulatory battle, considering they represent two of the “Big Four” U.S. air carriers. (Delta Air Lines (DAL, +6.9%) and Southwest Airlines (LUV, +4.6%) are the other two.)
UBS Global Research analyst Atul Maheswari thinks the chances of a UAL-AAL merger are slim. “Still,” he says, “if this proposed merger goes through, it could prove to be a game changer for the U.S. airline industry and might usher in even more consolidation, helping to drive structurally higher margins for the sector.”