U.S. equity markets pushed to fresh highs Friday as semiconductor strength and robust corporate earnings offset a spike in producer inflation, while oil markets remained elevated on continued Strait of Hormuz disruption. The S&P 500 climbed 0.58 percent to 7,444.25, the Nasdaq gained 1.20 percent to 26,402.34—both closing records—and the Dow Jones Industrial Average held near 49,700. For the week, the S&P 500 surged 4.1 percent, the Nasdaq gained 5.2 percent, and the Dow added 2.8 percent.
Nvidia led the tech charge, rising 2.3 percent after the U.S. government cleared H200 artificial intelligence chip shipments to approximately 10 Chinese firms during this week’s Trump-Xi summit in Beijing. The approval, a targeted concession amid broader technology restrictions, sent Nvidia’s market capitalisation to roughly $4.78 trillion. Micron Technology gained 4 percent, and the VanEck Semiconductor ETF (SMH) rose 2 percent on the session. Cisco Systems advanced 13.4 percent after raising its annual revenue forecast, citing surging demand for AI infrastructure from hyperscaler clients. First-quarter blended earnings for the S&P 500 show growth of 15.1 percent year-on-year, with 84 percent of reporting companies beating analyst estimates—supporting the equity market’s elevated valuation multiples.
Commodity markets remained in focus. West Texas Intermediate crude hovered around $101 per barrel Friday, on track for a weekly gain of approximately 7 percent as the Strait of Hormuz disruption persisted. Brent crude held above $106 per barrel. The strait’s effective closure, driven by the escalating U.S.-Iran confrontation, has disrupted roughly 4 million barrels of daily oil transit through October at minimum, according to International Energy Agency estimates. Morgan Stanley has warned of a potential $110–$150 scenario if the disruption extends. Retail gasoline prices averaged $3.87 per gallon nationally this week, their highest level since mid-2022.
Gold eased $4.52 to $4,647.79 per troy ounce Friday as improving risk sentiment weighed on the safe-haven metal, though it remained up roughly 48 percent year-on-year. Silver traded at $83.49 per ounce. The U.S. Dollar Index slipped 0.3 percent as investors weighed a leadership transition at the Federal Reserve: Kevin Warsh, widely seen as more hawkish than the current chair, advanced toward confirmation as Fed chair. Markets now price roughly a 28 percent probability of a rate cut by year-end, down from 35 percent a month ago, as elevated producer prices and tight labour markets limit near-term easing scope.
Producer inflation data released Friday added a layer of complexity. The Producer Price Index rose 1.4 percent in April—the sharpest monthly gain since March 2022—pushing annual wholesale price inflation to 6 percent, its steepest reading since late 2022. The data underline the challenge facing policymakers: supply-side pressures from energy disruption colliding with a labour market that remains historically tight. First-time unemployment claims fell to 215,000 for the week ended May 10, below the 230,000 consensus, suggesting that the Fed’s room to cut rates absent a deterioration in the labour market remains limited.
The Trump-Xi summit in Beijing this week produced modest diplomatic progress. The two leaders agreed that the Strait of Hormuz must remain open and that Iran must not acquire nuclear weapons, while Xi indicated China would purchase additional U.S. crude oil. Xi warned, however, that mishandling of Taiwan could put bilateral relations in “great jeopardy,” a reminder that structural tensions remain unresolved. Analysts at Harvard’s Graham Allison noted that a formal U.S.-China trade truce is plausible by autumn, though implementation details and enforcement mechanisms have yet to be negotiated. Trump has invited Xi to Washington on September 24, with follow-up meetings planned on the margins of APEC and the G20 summits later in the year.
Looking ahead: minutes from the Federal Open Market Committee’s last meeting release next week, offering insight into internal debates over the rate path. Housing starts for April and flash purchasing managers’ index readings for May will further test whether the U.S. economy is decelerating fast enough to justify easing or accelerating enough to force additional tightening. Markets will also monitor Geneva nuclear talks with Iran and any escalation in Hormuz naval activity for directional cues in energy markets.