S&P 500 Hits Record High as Tech Rally Masks Broader Market Weakness

CNBC reported Wednesday that the S&P 500 record high marked a striking split session, with the broad index climbing 0.6% to a fresh intraday peak even as two-thirds of its own components finished lower.

The tech-heavy Nasdaq gained 1.2%. The Dow Jones Industrial Average, however, dropped 154 points, or roughly 0.3%, weighed down by consumer-facing and financial names.

Tech and Chips Lead While Other Sectors Retreat

Semiconductor stocks powered the advance. Nvidia added more than 2%, Micron Technology surged approximately 3%, and the VanEck Semiconductor ETF climbed 2%. On Semiconductor jumped 10% and Marvell Technology rose 7%.

Retail and banking names struggled. Home Depot and JPMorgan were among the broader cyclical decliners, as higher energy prices tied to the ongoing Iran conflict stoked inflation anxiety across rate-sensitive sectors.

Baird investment strategist Ross Mayfield told CNBC the chip trade has taken on its own momentum. Investors appear to view AI-related demand as structurally durable, he said, insulating those names from macro headwinds that are hurting other parts of the market.

Background: Inflation Data Keeps Pressure On

Wednesday’s session followed a turbulent Tuesday. The S&P 500 and Nasdaq both pulled back from record levels after the April consumer price index came in hotter than expected.

Wednesday brought fresh fuel for inflation concern. The producer price index rose 1.4% in April, the sharpest monthly gain since March 2022 and well above the 0.5% increase economists had forecast. On an annual basis, wholesale inflation hit 6%, the largest such increase since December 2022 and above the 4.9% consensus estimate.

Nvidia’s China Visit Adds a Geopolitical Lift

Sentiment in chip stocks also got a boost from a diplomatic signal. Nvidia CEO Jensen Huang accompanied President Donald Trump on a visit to China, where Trump met with President Xi Jinping. Mayfield said the optics raised investor hopes that Nvidia could eventually regain access to Chinese AI chip markets, though he cautioned his own expectations for the meeting remain modest.

Mayfield also flagged that the chip rally’s staying power is not guaranteed. If the broader macro environment deteriorates further, he suggested, investors holding large semiconductor positions may begin locking in gains.

Elsewhere, Akamai Technologies jumped nearly 7% after Bank of America upgraded the stock to buy and lifted its price target to $175. Nebius, an AI cloud provider, surged 16% after posting first-quarter revenues of $399 million, a 684% year-over-year increase.

Read Next: Fed Watch: What the Latest Inflation Data Means for Rate Cut Timing