[New York Stock Exchange] CPI Hits 3-Year High... Mixed Close Amid Inflation Concerns

Core CPI for April Exceeds Expectations
Energy Index Accounts for Over 40% of CPI Gains
Inflation Concerns Resurface
International Oil Prices End Higher

As the U.S. Consumer Price Index (CPI) for April reached its highest level in three years, fueling concerns over inflation, the three major U.S. stock indices ended mixed on May 12 (local time).

On this day, at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 49,760.56, up 56.09 points (0.11%) from the previous trading day. The S&P 500, which focuses on large-cap stocks, ended at 7,400.96, down 11.88 points (0.16%), while the tech-heavy Nasdaq index declined by 185.922 points (0.71%) to 26,088.203.

The market's main focus was the CPI figures. According to the U.S. Department of Labor, the April CPI rose 3.8% year-on-year and 0.6% month-on-month. This was in line with expert forecasts, but it was the highest reading in three years since May 2023.

The core CPI, which excludes the more volatile food and energy sectors, increased by 2.8% year-on-year and 0.4% month-on-month, surpassing market expectations of 2.7% and 0.3%, respectively. This suggests that the underlying trend in inflation remains more robust than anticipated.

In detail, energy prices drove the index higher. The energy index rose 3.8% from the previous month, accounting for over 40% of the total rise in the CPI. Notably, gasoline prices climbed 5.4% month-on-month and soared 11.1% before seasonal adjustment. Compared to the previous year, gasoline prices jumped by 28.4%. This is attributed to the continued rise in international oil prices being reflected in consumer prices, as the war in Iran has lasted longer than expected.

Thomas Martin, Chief Portfolio Manager at Globalt Investments, told CNBC, "It is not a sudden avalanche, but rather a steady upward trend," adding, "The longer the war in Iran drags on, the more inflation will continue to intensify."

He added, "As prices, including gasoline, rise, more and more people will experience hardship, and consumers will continue to face tough times."

Among the stocks that saw the biggest declines on the S&P 500 and Nasdaq were semiconductor stocks such as Broadcom, Intel, and Micron. The Philadelphia Semiconductor Index, which had risen more than 60% since the beginning of this year, also fell as much as 6.8% during intraday trading—its largest drop in a year—but partially recovered to end the session with a decline of just over 3%.

Barry Knapp, Managing Partner at Ironsides Macroeconomics, commented, "People were anxious about the rapid surge, and after such a sharp jump, reducing exposure is prudent risk management," adding, "There are no fundamental reasons to expect an imminent slowdown in earnings growth."

Chris Murphy, Co-Head of Derivatives Strategy at Susquehanna International Group, said, "The historic rally in semiconductor manufacturers could not last forever. This sell-off was to be expected after such a massive rally, but given that 'FOMO' (fear of missing out) sentiment is still widespread throughout the market, it is likely to be short-lived."

Meanwhile, international oil prices closed higher. On the New York Mercantile Exchange, West Texas Intermediate (WTI) crude for June delivery rose 4.2% to $102.18 per barrel. On the ICE Futures Exchange, Brent crude for July delivery increased 3.4% to $107.77 per barrel.

The yield on the 10-year U.S. Treasury note rose 5.0 basis points (1bp = 0.01%) from the previous trading day to 4.463%. The yield on the 30-year U.S. Treasury note increased by 3.8 basis points to 5.025%.