S&P 500 Hits Record High of 7,800 as Cooling US July PPI Lifts Risk Appetite; AI Hardware Stocks Lead, Micron Rises Over 5%

TradingKey - On August 13, Eastern Time, risk appetite in U.S. stocks rebounded, with the S&P 500 Index rising 0.85% intraday to reach 7,816.7 points and set a new all-time high; the Nasdaq Composite Index gained 1.04%; and the Dow Jones Industrial Average rose 0.34%. The Philadelphia Semiconductor Index surged 2.07%, serving as a major driver for the market's upward momentum that day.

The core driver behind the strengthening of risk assets was the continuous release of easing signals from U.S. inflation data. Data released by the U.S. Bureau of Labor Statistics on the same day showed that the PPI in July was flat month-over-month, below market expectations for a modest rise; the year-over-year increase slowed to 4.7% from 5.5% in June.

Core PPI (excluding food and energy components) rose 0.2% month-over-month, lower than the expected 0.3%, with the year-over-year growth rate slowing to 4.2%. Previously released consumer price data also showed cooling inflation, easing market concerns over near-term Fed rate hikes.

Looking at the PPI components, the decline in energy prices remained the primary source of the wholesale inflation cool-down. In July, final demand goods prices fell 0.7% month-over-month, marking the second consecutive monthly drop; energy prices fell 3.1%, food prices decreased 0.9%, and goods prices excluding food and energy rose only 0.1%.

The retreat in oil prices also drove bond yields lower, prompting traders to scale back bets on Fed interest rate hikes. The recalibration of rate expectations improved the valuation environment for growth stocks.

With interest rate pressures easing, the tech and semiconductor sectors strengthened significantly. As of press time, SK Hynix (SKHY) rose 5.87%, SanDisk (SNDK) gained 5.58%, Micron (MU) advanced 5.22%, Marvell Technology (MRVL) jumped 5.03%, and Intel (INTC) climbed 4.90%. This indicates that as macroeconomic disturbances wane, capital is flowing back toward high-valuation growth sectors more sensitive to interest rate changes, also driving the Nasdaq to outperform the Dow.

However, the moderation in inflation does not mean that policy disagreements within the Fed have disappeared. Fed official Barkin noted that whether inflation is on a downward trajectory remains inconclusive, though some officials believe current interest rates are already sufficiently restrictive; official Hammack advocated for rate hikes, arguing that inflation pressures following recent shocks remain broad-based. Uncertainty over the policy path means the market will remain highly sensitive to subsequent inflation data and oil price fluctuations.

The S&P 500 reaching a new high reflects that the market is trading on a combination of "moderating inflation and cooling rate-hike expectations," but the sustainability of the rally still needs to be validated by whether the inflation cool-down can continue and whether the strength in tech stocks can spread to broader sectors.