Stocks Plunge on AI Worries as Core CPI Miss Fails To Offset: June 10, 2026

Stocks are plunging on AI capital expenditure worries even after a core CPI miss strengthened hopes that price pressures from the energy shock might be contained. But the favorable print hasn’t offset waning appetites for tech shares, especially in consideration of the inflation gauge’s headline print hitting the nosebleeds. While the 4.2% result was in-line with projections, it couldn’t soothe investors’ fears ahead of Fed Chair Kevin Warsh’s first meeting at the central bank’s helm next week. The Treasury complex is still demanding hikes, although yields and the greenback are flat today in response to the indicator matching estimates for the most part. Rates likely would have fallen modestly if it had not been for a flare up in Middle East tensions, including President Trump shouting threats at Tehran, which drove up fuel costs. Still, the fact that crude oil is now anchored near $90 per barrel after hovering near $100 for months is also raising confidence that this morning’s CPI will mark a medium-term peak in cost forces. Turning to trading, the majority of equity sectors are advancing despite deep benchmark losses while non-energy commodities sink, led by precious metals tumbling as global monetary policies inch closer to being tighter rather than looser. Indeed, the ECB and Japan are poised to hike in the coming days. Elsewhere, volatility protection instruments, cryptocurrencies and prediction markets are catching bids.

Strongest CPI in 37 Months

Despite the May Consumer Price Index (CPI) reaching its highest level since April 2023, the monthly increase has slowed for the second consecutive month, reflecting progress on the energy front. Still, the 0.5% month-over-month (m/m) and 4.2% year-over-year (y/y) increases, which matched expectations, were way too elevated for comfort, and they compare to the 0.6% and 3.8% figures from April. Core fell below the projected 0.3% m/m, meanwhile, arriving at 0.2% m/m and 2.9% y/y versus the prior period’s 0.4% and 2.8%. Cost pressures in this morning’s print were led by the following categories that had m/m sticker changes as noted:

• Gasoline, 7%
• Electricity, 0.6%
• Medical care, 0.5%,
• Food at restaurants/bars, 0.3%
• Apparel, 0.3%
• Shelter, 0.3%
• Food at markets, 0.1%
• Used automobiles, 0.1%

Conversely, medical commodities, transportation services, utility gas service, and new automobiles became 0.7%, 0.6%, 0.5% and 0.3% cheaper. Car insurance and rental services offered relief that countered the lift in airfares.

Peak CPI Could Drive Rotation Trade

Potentially lower CPI readings in the coming months accompanied by a resolution of the Middle East conflict could certainly drive the rotation trade as AI enthusiasm softens. Those developments would be welcome because they would foster a calmer Treasury complex that can begin to price out its geopolitical premium alongside lighter inflation expectations. A broadening in the equity space could have legs, but due to the cyclical, rate sensitive nature of the non-tech, offensive sectors, Wall Street needs sinking yields for those areas to meaningfully hold up the benchmarks. Tomorrow’s Producer Price Index (PPI) report could provide just that, as results beneath the elevated bars of 0.7% m/m and 6.4% y/y could spark a solid day for fixed-income returns that could quell investor anxieties related to the potential for tighter monetary policy under new Fed Chair Kevin Warsh. Such an occurrence could also revive bids for equities that have been struggling in recent days against the backdrop of substantial AI capital expenditures have firms scrambling for cash on their balance sheets, in the bond market and in some cases, with secondary offerings that dilute current shareholder ownership.

International Roundup

China’s Yearly Producer Prices Increases Continued Last Month

Producer prices in China climbed 3.9% y/y, marking the third consecutive month of increases following a more than three-year period of deflation. The PPI gain, which matched the economist consensus estimate, intensified from 2.8% and 0.5% in April and March, respectively, and was the largest hike since July 2022. The metric was also up 0.5% m/m. Wholesale prices have been soft in response to weak domestic demand as illustrated by the May CPI falling 0.1% m/m and climbing only 1.2% y/y. Higher oil prices, however, helped push the PPI up. The y/y CPI was unchanged from April’s print and was a tad cooler than the economist consensus estimate of 1.3%. The m/m report, however, was a reversal from April’s 0.3% climb but it was slightly higher than expectations for a 0.2% fall. 

Japan’s Gate Prices Jump Past Expectations

May factory gate prices in Japan surged 6.3% from the year-ago period, the fastest rate in three years, but the monthly 0.9% hike eased from 2.8% in April, according to the preliminary PPI, which is also called the Corporate Goods Price Index. The y/y rate accelerated from 5.3% in April and surpassed the 5.6% economist consensus estimate. The monthly hike, furthermore, was higher than the 0.5% lift anticipated by economists. The m/m print slowed as a result of prices for petroleum and coal ascending only 3% following April’s 11.8% spike. Nevertheless, the category was still 13.8% more costly than in the year-ago period. Price pressures from the information and communications equipment category also slacked, falling from 6.8% in April to 0.6%. The chemical category, which was up 7.2% m/m in April, meanwhile, posted inflation of only 2.3%.

Categories with some of the largest m/m increases and the extent of their changes were as follows:

• Electric power, gas and water, 3.5%
• Nonferrous metals, 3.4%
• Plastic products, 2.3%
• Lumber and wood, 1.7%
• Metal products, 0.8%
• Iron and steel, 0.4%
• General purpose machinery, 0.3%

Conversely, the agriculture, forestry and fishery products group and the production machinery classification sank 1.2% and 0.3%. Likewise, electrical machinery and equipment slipped 0.2% and business-oriented machinery fell 0.1%.

Also in May, exporters increased their prices by 0.4% m/m and 20.6% y/y.  The steep monthly print was led by prices for the electric and electronic products category and the other primary products and manufactured goods group jumping 35.4% and 33.9%. Import prices, meanwhile, climbed 8.7% m/m and 25.5% y/y. For both time periods, petroleum, coal and natural gas experienced the strongest inflation with prices up 8.7% m/m and 47% y/y. 

Bank of Canada: Oil Hasn’t Led to Broader Inflation

The Bank of Canada decided this morning to maintain its key interest rate at 2.25%, a decision that was followed by Governor Tiff Macklem explaining that the organization has yet to see evidence that higher crude oil prices are extending to other goods and services. The decision to hold was widely anticipated by economists. Looking ahead, the organization believes oil will push the annualized rate of inflation from 2.8% to 3% in the coming months. Macklem also maintained the central bank’s current interest rate is appropriate for balancing the risks of inflation with a slowing economy. Canada has experienced two consecutive quarters of negative gross domestic product, the definition of a technical recession.