Stubborn Price Growth Persists, Stocks Down Early
Published as of: May 12, 2026, 9:16 a.m. ET
(Tuesday market open) Wall Street slumped early Tuesday as April's Consumer Price Index (CPI) rose more than expected, oil climbed, and tech stocks backed off from their rally. Monthly CPI gains met consensus with headline inflation up 0.6% and core, excluding food and energy, up 0.4%, but annual gains topped estimates. Stocks had already been down heading into the report thanks to a 3% rise in U.S. crude to above $100 per barrel. Oil's rally occurred as CNN reported that President Trump is more seriously thinking of restarting combat operations in Iran.
CPI for April of 3.8% year over year topped the 3.7% consensus, while annual core CPI of 2.8% exceeded the 2.7% average estimate. "The headline annual number was very hot, but that was to be expected given the situation in Iran," said Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "Core beat expectations and is moving in the wrong direction, which weakens the case for Fed rate cuts in the near-term."
Yesterday brought fresh record highs for the S&P 500 Index and the Nasdaq Composite despite rising oil and lack of progress in peace negotiations. Volatility rose, too, with the Cboe Volatility Index (VIX), up 7%. Often, rising volatility along with higher stocks means something might give. Stocks appeared to get the message today as they fell with VIX up another 1%.
Three things to watch
- CPI deeper dive: Today's CPI might unnerve investors with early signs that rising energy costs are maneuvering their way insidiously into the economy. While the headline number included an unsurprising 17.9% year-over-year increase in the price of energy, core measures excluding energy costs also showed strain. "There are starting to be signs that higher energy prices are showing up in more of the core elements of the report," Howard said, pointing to a broad-based rise in prices. Airline fares rose 20.7% year over year and transportation costs rose 7.1% year over year. Another point of concern is inflation versus wages. With headline inflation up 3.8% year over year, that means real average hourly earnings growth, adjusted for CPI, slipped into negative territory for the first time since April 2023, said Kevin Gordon, head of macro research and strategy at SCFR. Meanwhile, so-called "supercore CPI," which doesn't include housing, food, or energy, rose almost 3.4% year over year in April. This reading is one closely followed by the Fed, as it removes certain price elements that might be temporary. Treasury yields rose after CPI, with the benchmark 10-year note yield up to 4.43%. This year's high is 4.48%, and rising yields already weighed on stocks to some extent Monday before CPI.
- Bound to Beijing: Beyond data and Treasury auctions, this week includes President Trump's planned visit to China where he'll talk with Chinese President Xi. AI and trade-related topics could be discussed. "The meeting is more to 'keep the peace' on the trade war, although there may be some purchase agreements and discussions about access to technology and rare earths," said Michelle Gibley, director of international equity research and strategy at SCFR. The visit coincides with rising inflation in China thanks in part to climbing oil prices, but inflation may be welcomed as China has struggled with deflation, one possible reason for soft domestic demand and investment that's hurt earnings there. Of course, China doesn't want oil-driven inflation, and it traditionally imports large amounts of Iranian crude. That means the war and the Strait of Hormuz could be up for discussion as well, though it's unclear how much influence Xi has to push warring parties back from their stalemate. Investors might hope he does have some, with analysts warning that a fourth month of high oil prices could elevate business and consumer pain.
- Concentration risk looks elevated: Market breadth still seems unimpressive, another sign of the market's current concentration risk. Heading into the week, just 51% of S&P 500 stocks traded above their 50-day moving averages, well below peaks above 70% earlier this year when sector rotation lifted many firms outside of tech. It wasn't much better for the Nasdaq Composite at 55% despite that index's heavy exposure to the sizzling tech sector. Also, about 8% of S&P 500 stocks posted new 52-week lows yesterday, Barron's noted, a large amount considering the index made record highs and perhaps another sign of struggles beneath the surface of the tech-driven rally. Meanwhile, technical indicators suggest both the S&P 500 Index and Nasdaq-100® (NDX) are stretched. The only precedent for the S&P 500 being at record highs with less than 60% of its members above their 50-day and 200-day moving averages was December 1998 to March 2000. Veteran investors won't have to Google to understand the significance of that latter month.
DIY investing? Trading? Professional advice?
On the move
- Hims & Hers (HIMS) dropped more than 14% early today after reporting an annual quarterly loss that was higher than a year earlier. Average monthly revenue per prescriber fell, too, for the telehealth company, and guidance disappointed some investors.
- Memory chip stocks—on a roll recently amid shortages and rising product prices—headed lower early Tuesday in what could be profit taking. SanDisk (SNDK) fell 4% while Micron (MU) and Western Digital (WDC) fell 3%. The rest of the chip sector also appeared less vigorous early today, with Intel (INTC) down 4% and Taiwan Semiconductor Manufacturing (TSM) down almost 2%, but news flow was thin.
- Under Armour (UAA) toppled 14% ahead of the open after earnings per share missed consensus estimates and the company also provided below-consensus guidance, expecting revenue to fall year over year in fiscal 2027. The company is going through a restructuring plan that's exceeding cost estimates.
- GameStop (GME) fell more than 2% and eBay (EBAY) slipped less than 1% after eBay rejected GameStop's $55 billion takeover offer, The New York Times reported.
- Wendy's (WEN) heated up 18% early today as The Financial Times reported that Nelson Peltz's activist firm Trian Fund Management is in talks to raise funds for Wendy's go-private bid.
- On Holding (ONON) fell nearly 3% despite better-than-expected earnings for the developer and distributor of sportswear.
- Lowe's (LOW) rose more than 2% in early trading, lifted by an upgrade to buy from neutral at Citigroup. Lowe's should top Q1 consensus estimates and continue to outperform the industry, the analyst told investors in a research note.
- Alphabet (GOOGL) fell 3% Monday after Reuters reported that Alphabet and Amazon (AMZN) could be planning to sell Japanese yen-denominated bonds. This would apparently be to support AI spending. Amazon fell 1.3% Monday. The news appeared to make investors more nervous about rising AI expenditures by mega caps. Meta Platforms (META) and Microsoft (MSFT) also fell, but mega caps Nvidia (NVDA) and Tesla (TSLA) gained yesterday.
- Bonds and equities continue to diverge—with bonds under pressure and major indexes posting frequent new highs. One thing to watch is whether that relationship holds, and that might depend partly on oil. Stocks appear to be looking past high crude, but bonds are weighing it heavily.
More insights from Schwab
Could PCE lose luster under Warsh? The Personal Consumption Expenditures (PCE) price index has long captured investor interest as the Federal Reserve's favored inflation meter. With Kevin Warsh likely taking charge of the Fed later this week, that may change, as he's stated a preference for others. Find out which ones and why in our new look at markets and the economy.
Foreign investors in U.S. markets—tax considerations: For overseas investors who aren't U.S. citizens or residents, U.S. financial markets are available for investing but with certain tax obligations. Learn about these and other considerations in our latest tax planning piece.
AI and emerging markets: Although the MSCI Emerging Market Index is expected to show rapid earnings growth in 2026, it seems to be attributable to an outsized impact of a few semiconductor companies. The Iran war and energy shock disrupted the supportive EM environment, as well. Learn more about trends in EM stocks in up-to-date analysis on international investing.
Chart of the day
Data sources: CME Group. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
Materials sector stocks had a strong start to the week, helped by a new record high for copper futures (/HG—blue line) and strength in silver futures (/SI—candlesticks). Copper continues drawing support from construction demand associated with the data center buildout, while silver prices may have found some technical support after diving from record highs posted back in January. Silver dipped when the war began, possible on concerns about economic struggles around the globe reducing demand.
The week ahead
Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.
May 13: April PPI and core PPI, and expected earnings from Alibaba (BABA) and Cisco (CSCO).
May 14: April retail sales and expected earnings from Applied Materials (AMAT).
May 15: April industrial production and capacity utilization.
May 18: Expected earnings from Baidu (BIDU).
May 19: Expected earnings from Home Depot (HD), Toll Brothers (TOL), and Cava Group (CAVA), and April housing starts and building permits.
DIY investing? Trading? Professional advice?
Explore more topics
This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The {securities, investment products and investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.
For illustrative purpose(s) only.
The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.
Supporting documentation for any claims or statistical information is available upon request.
Past performance is no guarantee of future results.
Investing involves risk, including loss of principal, and for some products and strategies, loss of more than your initial investment.
Diversification and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.
"Indexes are unmanaged, do not incur management fees, costs, and expenses (and/or "transaction fees or other related expenses"), and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions. For additional information about the indices and terms shown, please visit www.schwabassetmanagement.com/resources/glossary.
The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.
Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed-income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.
Digital currencies [such as bitcoin] are highly volatile and not backed by any central bank or government. Digital currencies lack many of the regulations and consumer protections that legal-tender currencies and regulated securities have. Due to the high level of risk, investors should view digital currencies as a purely speculative instrument.
Cryptocurrency-related products carry a substantial level of risk and are not suitable for all investors. Investments in cryptocurrencies are relatively new, highly speculative, and may be subject to extreme price volatility, illiquidity, and increased risk of loss, including your entire investment in the fund. Spot markets on which cryptocurrencies trade are relatively new and largely unregulated, and therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments. Some cryptocurrency-related products use futures contracts to attempt to duplicate the performance of an investment in cryptocurrency, which may result in unpredictable pricing, higher transaction costs, and performance that fails to track the price of the reference cryptocurrency as intended. Please read more about risks of trading cryptocurrency futures here.
All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
Schwab does not recommend the use of technical analysis as a sole means of investment research.