US Stocks Hit Record Highs Despite Inflation Worries

US stock markets, including the S&P 500 and Nasdaq, achieved record highs on Wednesday, May 13. Investors largely disregarded recent hotter-than-expected inflation data, including the Producer Price Index (PPI) which rose 1.4% month-on-month in April. This surge in wholesale inflation was the largest increase since December 2022, with services inflation also climbing.

The market's positive sentiment was driven by anticipation of a beneficial outcome from the upcoming summit between US President Donald Trump and Chinese President Xi Jinping. Discussions are expected to cover critical topics like rare earths, AI, Iran, Taiwan, and tariffs. The possibility of significant trade deals, such as a large Chinese order for US planes or increased soybean purchases, contributed to the buying enthusiasm.

Despite the broad market gains, breadth remained a concern, with a majority of S&P 500 constituents ending the day with losses. This indicates that the rally was concentrated among a few leading stocks. Meanwhile, oil prices hovered around $105 a barrel, with warnings from the International Energy Agency about potential further price increases due to strong summer demand and rapidly depleting inventories.