The Midday Tape
A hotter-than-expected inflation print and a resilient consumer are colliding with a fresh wave of AI-chip anxiety, and the result at midday is a market rotating hard out of growth and into defense.
Producer prices run hot, but the consumer holds up.
PPI came in at 6.3% year-over-year with the core ex-food/energy/transport print up 5%, both uncomfortably sticky for a Fed watching inflation. Retail sales rose 0.7% (0.9% ex-autos), and jobless claims printed a tight 199,000, confirming a labor market that isn't cracking. The bond market's reaction looks more risk-off than inflation-fear: Treasuries (TLT) are up 1.5% even with the hot PPI, suggesting the real story is money seeking safety out of equities rather than bracing for higher rates.
Defensives lead, tech trails.
The sector tape is unambiguous: healthcare, staples, utilities and materials are outperforming while technology lags the broader market. The Nasdaq-tracking QQQ is down 0.6% versus a flat S&P 500 (SPY), and small caps (IWM) are actually bucking the trend, up 0.8%, a sign this is rotation rather than a broad risk-off flush. Gold (GLD) and oil (USO) are both bid, up 1.1% and 2.4% respectively, rounding out the defensive posture.
The AI trade is under renewed pressure.
CoreWeave's (CRWV) debt situation is back in focus, with the stock down 2.6% and the street debating whether SOXX or SMH carries more exposure to the fallout. Nvidia (NVDA) CEO Jensen Huang pushed back, telling Bloomberg CoreWeave is "improving" and needs "no backstop," but NVDA still slipped 1.7% even as the company rolled out its Nemotron 3.5 Super VL model for enterprise AI agents. Intel (INTC) is the session's bigger laggard, down 3.4%, with chip names broadly under scrutiny after a rough stretch for memory and semi-cap stocks. PNC, reporting this morning, added fuel to the worry by warning that an AI-spending slowdown could hit lending growth even without direct exposure to the space.
Single-name movers tell their own stories.
Eli Lilly (LLY) is up 4.6% after reporting its new drug drove comprehensive disease control in ulcerative colitis patients. Kimberly-Clark (KMB) jumped 4.8% after reaffirming its 2026 profit outlook. Elsewhere, bank earnings season is grinding through the system, with analysts trimming and tweaking targets across Bank of America, Morgan Stanley and State Street following recent results, while RBC took the knife to homebuilder price targets across Toll Brothers, PulteGroup, KB Home and D.R. Horton.
Still ahead this afternoon:
J.B. Hunt reports after the close, rounding out a heavy earnings slate that's included PNC, Schwab, US Bancorp and BNY Mellon today. Watch whether the defensive rotation holds into the close, and keep an eye on chip-sector headlines as the CoreWeave story continues to develop. Friday's monthly options expiration is also on deck.
Bottom line: solid hard data isn't enough to offset AI-sector jitters, and the market is making its preference clear, defensives over growth, for now.