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The Dow Jones Industrial Average fell on Wednesday as a hotter wholesale inflation report pushed Treasury yields higher and weakened confidence in rate-sensitive sectors. The blue-chip index dropped 282 points, or 0.6%, while the S&P 500 gained 0.2% and the NASDAQ Composite rose 0.7%.
The split stock market showed a clear divide between inflation-hit industries and technology stocks. Retail, banking, and other economically sensitive groups faced pressure as investors reacted to higher producer prices. However, chipmakers supported the NASDAQ as demand tied to artificial intelligence remained strong.
The producer price index rose 1.4% in April, marking its largest monthly increase since March 2022. Economists had expected a 0.5% rise. On an annual basis, wholesale inflation climbed 6%, above the 4.9% estimate and the fastest pace since December 2022.
The report strengthened concerns that companies may face higher input costs across goods and services. Energy prices also added pressure as geopolitical tensions around Iran continued to affect inflation expectations. The data increased investor focus on whether elevated costs could reduce corporate margins.
Technology stocks moved against the broader market weakness. NVIDIA gained more than 2%, Micron Technology rose more than 4%, and the VanEck Semiconductor ETF advanced 1%. These gains helped the NASDAQ outperform the Dow and the S&P 500.
Semiconductor shares have led much of the recent US equity rally. The Philadelphia Semiconductor Index has climbed 64% since March 30, while the S&P 500 has gained about 17% over the same period. Micron, AMD, and Intel also posted sharp gains during the rally.
The chip rally reflects strong demand for AI infrastructure, data centers, networking equipment, and memory products. Gartner expects global semiconductor revenue to rise 64% to $1.3 trillion this year. LSEG data also shows S&P 500 semiconductor and equipment companies may increase earnings by about 95% in 2026.
However, some investors now see signs of an overheated trade. The semiconductor group accounts for 18% of the S&P 500’s weight, which raises broader market risk if momentum weakens. Baird investment strategist Ross Mayfield said chip and AI infrastructure names have moved strongly, but investors may take gains if the macro backdrop worsens.
The broader market shows weaker participation below the headline indexes. Although the S&P 500 recently traded near record levels, only slightly more than half of its stocks stood above their 50-day moving averages. That gap suggests the rally depends heavily on a narrow group of technology leaders.
Wolfe Research also warned that the market may face a near-term top after the rebound from US-Iran war lows. The firm said technology stocks may need to consolidate recent gains, especially if oil prices stay high or inflation reports keep surprising investors.
In separate corporate news, Shutterstock agreed to pay $35 million to settle US Federal Trade Commission charges over its subscription and cancellation practices. The FTC accused the company of failing to clearly disclose auto-renewals and cancellation terms while making some subscription plans hard to cancel.
The settlement adds to the day’s regulatory backdrop for US companies. The FTC said affected consumers would receive relief under the proposed order. It also said Shutterstock must give clearer disclosures, obtain informed consent for charges, and maintain easier cancellation options.
Wednesday’s session showed a divided market. Hot wholesale inflation pressured the Dow and raised concerns about margins, yields, and consumer-facing sectors. However, the NASDAQ found support from chip stocks as AI demand kept semiconductor momentum alive. Investors now face a narrow rally, where strong tech earnings can support indexes, but inflation risk and stretched chip valuations may limit further gains.
Also Read: Stock Market Update: Nifty 50, Sensex Likely to Open Higher Amid Global Uncertainty
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