April PPI report even worse than April CPI report

Briefing.com Summary:

*The April PPI report had rising inflation written all over it.

*NVIDIA was a major swing factor in yesterday’s recovery effort.

*The probability of a rate hike being the Fed’s next move outweighs the likelihood of the next move being a rate cut.

You have to hand it to the stock market. It was down a good bit in Tuesday’s trading but sprang back to life in the afternoon session. Many stocks pared larger losses, but one very big stock—the biggest of them all by market cap—not only pared its losses but rebounded into positive territory. 

That stock would be NVIDIA, which closed with a 0.6% gain and 2.7% above its lows for the session. That move didn’t make all the difference for the market, but it was indeed a major swing factor that took a bad day for the market-cap-weighted indices and made it look uneventful.

The S&P 500 would close with a 0.2% loss after being down as much as 1.0%. The Russell 2000, for its part, recovered from a 2.5% decline and ended with a 1.0% loss. The recovery effort was all the more remarkable because it occurred despite oil prices settling near their highs for the session at $102.30/bbl, April CPI being up 3.8% year-over-year, and the 10-yr note yield climbing five basis points to 4.46%.

It was as if all the market could see was NVIDIA, which was reportedly lifted by speculation (now confirmed) that CEO Jensen Huang would be joining President Trump on his trip to China after all, raising hope that China might provide approval for the purchase of H200 chips by Chinese companies, according to Bloomberg.

To be fair, the market also saw yet another buy-the-dip opportunity, and it took advantage of it.  

The stock market’s bullish resolve, though, will again be put to the test today. The April Producer Price Index (PPI) was even worse than the April Consumer Price Index (CPI).

The producer price index for final demand surged 1.4% month-over-month (Briefing.com consensus: 0.4%) following an upwardly revised 0.7% increase (from 0.5%) in March. That was the largest advance since March 2022 and nearly 60% of the increase was attributed to a 1.2% advance in the index for final demand services. Excluding food and energy, the index for final demand jumped 1.0% (Briefing.com consensus: 0.3%) on the heels of an upwardly revised 0.2% increase (from 0.1%) in March.

Here is the headline, though, that will be the topic of conversation. The producer price index for final demand was up 6.0% year-over-year versus 4.3% in March, while the index for final demand, excluding food and energy, was up 5.2% versus 4.0% in March.

The key takeaway from the report is that the surge in producer prices in April wasn’t just energy-related. That surge accounted for the bulk of the 2.0% increase in the index for final demand goods, but two-thirds of the “broad-based advance” in the index for final demand services was attributed to a 2.7% increase in margins for final demand trade services.

In total, this is a report that bellows a rate hike way more than it does a rate cut. The 2-yr note yield is sitting at 4.00%, while the 10-yr note yield is up to 4.48%, just shy of the psychologically important 4.50% level. The probability of at least a 25-basis-point rate hike at the March 2027 meeting is up to 56.8%.

As for the probability of a rate cut anytime soon… fuhgeddaboudit.

Currently, the S&P 500 futures are down eight points and are trading 0.1% below fair value. They had been up 18 points shortly before the release of the PPI data. The Nasdaq 100 futures are up 46 points (but had been up 205 points) and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are down 275 points and are trading 0.5% below fair value.

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Originally Posted May 13, 2026 – April PPI report even worse than April CPI report