Markets open Thursday absorbing two consecutive Inflation shocks: Tuesday's CPI at 3.8% and Wednesday's PPI at 6.0% YoY, the highest since 2022 and nearly triple the 0.5% MoM consensus. The 10-year Yield hit a new high for the year at 4.467% following the PPI print. Against that backdrop, the Trump-Xi summit enters its first full day of talks in Beijing, with retail sales, jobless claims, and Import prices all landing at 8:30 a.m. ET. Applied Materials reports after the bell.

Key Highlights

  • Cisco surged 19% after hours; Q3 beat on results and guidance; nearly 4,000 Job cuts announced
  • PPI +1.4% MoM (consensus +0.5%), +6.0% YoY; core PPI +1.0% MoM; services +1.2% MoM, largest since 2022
  • Senate confirmed Kevin Warsh as Fed Chair; markets pricing 39% probability of a December rate hike; cuts fully priced out
  • Crude inventories drew 4.306 million barrels vs. 2.1 million expected; supports WTI above $100
  • Trump-Xi summit day one; Huang (NVDA), Musk (TSLA), Cook (AAPL), Fink (BLK), Solomon (GS), Schwarzman (BX), Fraser (C) in delegation; trade truce extension and Boeing/soybean purchases the primary expected outcomes
  • S&Amp;P 500 closed +0.58% at 7,444.25; Nasdaq +1.20%; 10-year yield at 4.46%, near 11-month high

Market Snapshot

U.S. Equity futures are little changed in early Thursday trading after Wednesday's tech-driven rally pushed the S&P 500 to a new record at 7,444.25, up 0.58%. The Nasdaq surged 1.20% to 26,402.344, led by semiconductor and AI names; the Dow slipped 0.14% to 49,693.20 as energy and value names gave back gains. The VIX eased to 17.87, down 0.67%, despite the inflation shock, reflecting that equities are pricing summit optimism over inflation risk. The 10-year yield is at 4.467%, a new high for the year, having risen following the PPI report. The 20-year and 30-year yields both eclipsed 5% on Wednesday, their highest levels since May 2025, reinforcing the higher-for-longer rate environment across the entire curve. WTI is at $101.46, up 0.44%, and Brent at $106.00, up 0.35%, with the IEA flagging greater Volatility ahead and OPEC cutting its Demand forecast. Gold is up 0.13% to $4,712.70 as inflation hedging provides a partial offset to the rate-cut repricing headwind. Silver fell 1.83% to $87.73.

Macro Context

Wednesday's PPI print was the session's defining shock and the week's most alarming inflation reading. Producer prices rose 1.4% MoM, nearly triple the 0.5% consensus, pushing the annual rate to 6.0%, the highest since 2022 and a full 110 basis points above the 4.9% forecast. Core PPI rose 1.0% MoM against a 0.3% consensus, and 5.2% YoY against a 4.3% forecast. Energy accounted for 60% of the goods component, with gasoline up 15.6% and final demand energy up 7.8%. Services rose 1.2% MoM, the largest monthly advance since March 2022, indicating the inflation is no longer purely an energy story. Trade services margins rose 2.7% and transportation and Warehousing prices jumped 5%. Goldman Sachs now expects May CPI to exceed 4.0% YoY. Rate hike probability climbed to 39% following the release; markets have fully priced out any chance of a Fed cut this year. The 10-year yield hovers around 4.46%, near its highest level since June last year.

Separately, the Senate narrowly confirmed Kevin Warsh as Federal Reserve Chair on Wednesday, with investors now assessing whether he will maintain the Central Bank's independence amid political pressure from an administration that has consistently pushed for lower rates. Warsh's first public appearance as Chair-designate will be closely watched for any signal on how he intends to handle the current inflation environment.

U.S. crude inventories fell 4.306 million barrels in the week ended May 8, more than double the 2.1 million barrel expectation, with gasoline inventories also dropping 4.084 million barrels. Stocks at the Cushing hub decreased by 1.702 million barrels. The larger-than-expected draw reflects continued refinery ramp-up activity and reduced import flows, and provides fundamental support for WTI above $100 independent of the Iran war premium.

Separately, the acting Pentagon comptroller told lawmakers the Iran war has cost U.S. taxpayers $29 billion so far, though internal assessments suggested costs may have already reached nearly $50 billion.

After the close, Cisco (NASDAQ:CSCO) delivered the session's standout Earnings result, surging 19% in extended trading after Q3 results and guidance both beat Wall Street expectations. The company also announced it would cut almost 4,000 jobs, a cost-reduction move that markets read as Margin-positive. Cisco's beat validates enterprise IT and AI networking demand and sets a constructive tone for Applied Materials' print tonight.

Jensen Huang of Nvidia (NASDAQ:NVDA) joined the Business delegation, adding AI chip export control discussions to an already dense agenda. Alongside Elon Musk of Tesla (NASDAQ:TSLA), Tim Cook of Apple (NASDAQ:AAPL), Larry Fink of BlackRock (NYSE:BLK), David Solomon of Goldman Sachs (NYSE:GS), Stephen Schwarzman of Blackstone (NYSE:BX), and Jane Fraser of Citigroup (NYSE:C), the delegation signals Trump's top priorities: tech, aircraft, and agriculture.

China is likely to press for greater access to advanced semiconductors while offering rare earth Supply assurances in return. Beijing may also seek a shift in U.S. language on Taiwan, from "not supporting" independence to "opposing" independence, a formulation with significant long-term policy implications.

On Iran, Trump told reporters on Tuesday he does not think the U.S. needs China's help, but analysts note that Xi holds Leverage as Iran's largest trade partner and top oil buyer, and could use the summit to help reopen the Strait of Hormuz on terms that allow Beijing to emerge as the diplomatic winner. No breakthrough on Iran is expected Thursday; the question is whether Xi offers a concrete commitment to pressure Tehran.

Thursday's 8:30 a.m. ET data cluster covers retail sales, jobless claims, and import prices simultaneously. Retail sales are the most market-moving of the three: the April consensus of +0.5% against a prior +1.7% suggests a sharp deceleration in consumer spending, which would be the first concrete evidence that the energy shock is reducing discretionary demand. Import prices at +0.9% would confirm the inflation pipeline is still filling.

Economic Data

8:30 a.m. ET: U.S. Retail Sales, April Consensus: +0.5% · Prior: +1.7% · The session's most important domestic print. A miss below +0.2% alongside back-to-back inflation shocks would signal the energy-cost squeeze is beginning to depress consumer spending. A beat above +0.8% would add consumption strength to an already overheating inflation picture.

8:30 a.m. ET: Initial Jobless Claims, week ending May 9 Consensus: 205,000 · Prior: 200,000 · Expected to tick up slightly. A print above 215,000 would raise questions about whether April's employment strength is beginning to soften.

8:30 a.m. ET: Import Price index, April Consensus: +0.9% · Prior: +0.8% · Coming the morning after a 6.0% YoY PPI, a beat confirms the inflation pipeline is still filling from overseas energy and goods costs.

10:15 a.m. ET: Kansas City Fed President Schmid speech Schmid has been on the hawkish end of the committee. Post-PPI and post-Warsh confirmation, his framing of where rates need to go is the operative signal.

5:45 p.m. ET: New York Fed President Williams speech Williams is among the most influential committee members. Any signal that back-to-back inflation shocks are shifting his rate path view would be the most market-moving Fed statement of the week.

Earnings: Before the Bell

Thursday's BMO slate is light relative to last week.

Brookfield Corporation (NYSE: BN), reporting against a year-ago EPS of $0.65 with consensus at $0.64, is the one name worth watching. Fee-bearing Capital growth and deployment pace at Brookfield Asset Management are the operative signals; in a rising-rate environment, the spread between Brookfield's Cost of Capital and its return on invested capital is the forward-looking variable.

Earnings: After the Bell

Applied Materials (NASDAQ: AMAT) EPS consensus $2.68 against a year-ago $2.39, on a fiscal Q2 basis. The session's most important earnings report. Applied Materials is the leading semiconductor equipment maker and the primary read on chipmakers' capital spending intentions. In the context of the Trump-Xi summit, AMAT is directly exposed to the export control dynamic: China accounts for approximately 30% of its Revenue, and any summit outcome that loosens or tightens chip equipment export restrictions will move the stock more than the quarterly numbers. The operative signals are China revenue trajectory, order Backlog, and management commentary on how export controls are shaping forward demand. A guidance beat in this environment would signal that AI-driven capex is strong enough to offset any China headwinds.

Source: Kalkine

One Number to Watch

6.0% is where PPI YoY landed Wednesday, and it is the number that sets Thursday's interpretive frame. Two consecutive inflation prints above expectations: CPI at 3.8% and PPI at 6.0%, have shifted the consensus from "hold" to a growing probability of hikes. The retail sales print at 8:30 a.m. ET will answer the crucial follow-on question: is the consumer still spending through the inflation shock, or is demand beginning to crack? If retail sales miss badly alongside a PPI at 6.0%, the Stagflation configuration is not just a risk scenario: it is the base case heading into the second half of 2026.