US Stock Markets Reach New Heights Amid Decline in Oil Prices

Wall Street Stock Indices Push to Fresh Records Amid Artificial Intelligence Bullishness

Despite a surprisingly big jump in US inflation, major Wall Street stock indices pushed to fresh records on Wednesday, driven by artificial intelligence bullishness and hopes for the US-China summit. The oil prices, which had been rising in anticipation of the talks, pulled back as traders viewed the meetings as a potential route to a resolution in the US-Iran war.

Market Performance

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The Nasdaq led major US indices, piling on 1.2 percent behind big gains in most tech giants, including Google parent Alphabet and Nvidia. While the Dow edged lower, both the S&P 500 and Nasdaq powered to fresh records. This strong session on Wall Street came on the heels of a benign day in Europe and Asia, where leading bourses also advanced.

Inflation Concerns

A US wholesale inflation report showed that wholesale prices rose six percent for the 12 months ending in April, according to US Department of Labor data. Month-on-month increases greatly exceeded expectations and were at their highest level since March 2022. The average price of a gallon of diesel in the United States is up around 50 percent since the start of the war, according to the AAA motor club. Concerns about higher energy costs bleeding through to other goods and services, like transportation costs, are expected to keep producer price inflation lifted in the coming months.

IEA Warning

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The International Energy Agency warned that countries were tapping into oil inventories and strategic reserves at a "record pace," meaning further price volatility was likely. "Rapidly shrinking buffers amid continued disruptions may herald future price spikes ahead," the IEA warned in its monthly report.

US-China Summit

Despite these concerns, equity markets advanced for the most part, a sign of hope ahead about the talks in China. US President Donald Trump landed in Beijing, accompanied by leading CEOs, including Tesla boss Elon Musk and Nvidia chief Jensen Huang. Trump and Xi are set to discuss extending a one-year tariff truce, which the two leaders reached during their last meeting in South Korea in October, although a deal is far from certain. China's controls on rare earth and agriculture exports are also expected to be on the menu.