Yesterday as President Trump was preparing to leave for his trip to China there was a bout of profit taking in US markets. However, that selling pressure abated around midday with major indices rallying into the close. The S&P 500 closed down ~0.2%, nearly a percent off the lows. A lot of that was due to the Tech sector rallying in the afternoon, taking what was a 3-4% decline to a more modest 1.5%. Semis fell 3% and the DRAM memory ETF dropped 7%, putting a pause into their parabolic rises, while other AI component/infrastructure stocks also pulled back.

The big story overnight was Nvidia (+3%) CEO Jensen Huang hopping on Air Force One in Alaska as a last-minute addition to the CEO delegation heading to China. Hegseth was already riding shotgun. Besides the trip, PPI this morning was another major storyline. The print was well ahead of expectations, further removing thoughts of rate cuts anytime soon. Despite the hot report, the S&P opened flat and is trading up just under 1.0% near its highs. Like yesterday Tech has strengthened from its lows of the day and is leading. Breadth however is soft with large and mega caps easily outperforming and flying the plane today.

Headline PPI was up 1.4% / 6.0% m.m/y.y, well ahead of the 0.5% / 4.8% estimates and the largest increase since April 2022. Final demand services accounted for much of the gains, led by Trade Services (i.e. retailer and wholesaler margins) rising 2.7% and accounting for ~40% of the 1.4% m/m increase. Transportation and Warehousing also saw a sharp increase (+5.0% m.m vs 1.8% last month).

Treasury yields moved a touch higher on the PPI print but then came all the way back in by the time the opening bell rang. They have bounced around since then, currently around flat. Brent crude is at the lows of the day, down ~2% following the IEA and OPEC released their monthly oil reports. Gold is modestly higher but other precious metals are seeing stronger gains (silver, platinum ~5%). Silver is testing its March highs ~$90. Copper continues to see solid gains as well, up another 2% today.