Bualuang Securities comments on its morning note that U.S. equity markets ended mixed overnight, but major indices continued charting record highs as tech stocks and AI themes drive momentum, overpowering inflation fears.
The S&P 500 rose 0.58% and the Nasdaq gained 1.2% on Wednesday, both closing at all-time highs, while the Dow Jones slipped by 0.14%. Notably, nearly two-thirds of S&P 500 stocks closed lower, following a hotter-than-expected April Producer Price Index (PPI), which surged 1.4% month-on-month and 6% year-on-year, the highest since 2022.
The semiconductor sector led the rally, with Nvidia climbing 2%, Micron surging 4%, and the SMH semiconductor ETF up 2%. This rebound reflects investors’ renewed confidence in AI infrastructure stocks, believing that structural growth in AI demand remains strong enough to offset short-term economic pressures.
Positive sentiment was further bolstered by Nvidia CEO Jensen Huang’s visit to China as part of Donald Trump’s delegation to meet with Xi Jinping, which investors interpret as a possible sign that Nvidia could resume AI chip sales to China.
Bualuang Securities notes that the current market behavior mirrors the late stage of a momentum rally: while major indices can keep pushing new highs, gains are increasingly dependent on a handful of mega-cap stocks. In the short term, AI-related narratives and tech sector earnings continue to provide support, but growing market valuations and broad pricing-in of a “soft landing + AI supercycle” mean new negative shocks could produce outsized downward moves compared to earlier in the rally.
