S&P 500 futures were up about 0.2% in pre-market trading on Wednesday, May 13, while Nasdaq 100 futures climbed roughly 0.7%, led by another bid in chip names after Tuesday’s late-session bounce. Dow futures were little changed. The early tone suggests investors are willing to look past the hot April inflation print, at least until the next data point lands.

That next data point arrives at 8:30 a.m. ET, when the Bureau of Labor Statistics releases the Producer Price Index for April. The March report showed final demand prices rising 0.5% month over month and 4.0% year over year, according to the BLS. A repeat of that pace would reinforce the view that pipeline pressures are not yet easing, and would complicate the Fed’s path back toward its 2% target.

Why this PPI matters more than usual

The Producer Price Index measures what domestic producers receive for their output. It is widely treated as a leading indicator for the Consumer Price Index, because what factories, refiners and wholesalers charge today often shows up in what households pay tomorrow. After Tuesday’s CPI surprise, traders want to see whether the wholesale side is feeding the consumer side, or whether April’s spike was concentrated in energy and a handful of services.

The CPI report released on May 12 showed headline prices rising 0.6% month over month and 3.8% year over year, with the energy index alone up 3.8% on the month and accounting for more than 40% of the headline increase, per the BLS. Core CPI, which strips out food and energy, rose 0.4% on the month and 2.8% from a year earlier. That core figure remains the key reference for the Federal Reserve. For a primer on how these readings are built and why they move markets, see our explainer on what inflation is and how it is measured.

Energy is the swing variable. Brent crude has stayed elevated through the spring as the conflict around Iran kept supply risk in the price. Any further escalation would feed directly into the goods component of next month’s PPI. Iran sits on more than 208 billion barrels of proven reserves and roughly 4 million barrels per day of output, so the threat to global flows is structural rather than headline-driven. We laid out the supply math in a recent piece on how much oil Iran actually has.

Bonds, the dollar and the rate-cut bet

The bond market is doing most of the talking. The 10-year Treasury yield traded around 4.42% on Tuesday, up roughly 4 basis points on the week, as fixed-income investors priced in a longer plateau for the federal funds rate. The 2-year yield sat near 4.0%, leaving the 2s/10s spread positive at roughly 40 basis points, a curve that has steepened out of inversion as the market has pushed cuts further into the future rather than closer.

Fed funds futures now imply only one quarter-point cut by year-end, down from three at the start of the year. A hotter-than-expected PPI would likely push that bet out further, lift the dollar, and pressure rate-sensitive corners of the equity market, from regional banks to small caps. A softer print, by contrast, would relieve the long end of the curve and give the tech rally room to extend. The mechanics of how yields and prices interact are worth a quick refresher for anyone reading the curve for the first time: see our guide on how bond yields work.

In currencies, the US Dollar Index (DXY) was steady in early trading. Gold traded around $4,700 an ounce, well below its January record near $5,590, but still at a level that reflects both inflation hedging and the geopolitical premium tied to Iran. Brent crude hovered near $107 a barrel.

Sectors and single stocks in focus

Tech sentiment going into the open is constructive but selective. Nvidia trades near $216 ahead of its Q1 FY27 earnings on May 20, with the Street already raising estimates for AI-driven data center demand. A clean PPI print would likely be read as a green light for further multiple expansion in semis. Software names, more exposed to long-duration discount rates, will track the 10-year yield tick for tick.

Outside tech, retailers and homebuilders are the most exposed to the inflation read. A sticky goods PPI would feed margin concerns into next quarter, particularly for discounters that have spent the past two earnings cycles flagging input cost pressure.

What to watch for the open

  • 8:30 a.m. ET — April PPI: a Reuters poll of 19 economists put the median forecast for headline final demand near 4.7% year over year, well above the March 4.0% print. Core PPI, excluding food, energy and trade services, is the cleaner read on underlying pipeline pressure.
  • 10-year Treasury yield: a break above 4.50% would put pressure on growth stocks. A drop back below 4.35% would extend the relief rally.
  • Dollar index: a stronger DXY post-PPI would signal traders are pricing «higher for longer» more aggressively.
  • Fed speakers: any commentary from voting FOMC members today will be parsed for tone shifts on the timing of the first cut.
  • Energy: watch front-month WTI and Brent for any tape bombs out of the Middle East. Energy was the largest single driver of the April CPI surprise.

If the PPI comes in close to consensus, the path of least resistance for stocks is sideways to slightly higher, with the 10-year doing the work. If it accelerates, expect the S&P 500 to retest support around its 50-day moving average and the dollar to firm. A clean miss to the downside, even by a tenth of a point, would put rate-cut bets back on the table and likely deliver the kind of broad-based rally that has been absent since the Iran shock began bleeding into goods prices.

Either way, the open is a data trade. Position accordingly.

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