Hotter than expected April inflation and a spike in bond yields cooled the AI-fueled rally as the trading week came to a close. While little has stood in the way of bulls over the last five weeks, signs of broadening inflationary pressures beyond just the pump have raised concern that consumers and businesses will struggle to keep up with rising prices.
Economic Highlights:
- Consumer prices soared to a three year high in April. The CPI Index increased 0.60% month-over-month, putting the annual inflation rate at 3.80%. Core CPI (excluding food and energy) rose 0.40% from the prior month and was up 2.80% YOY. Although energy prices, in particular gasoline, accounted for 40% of the headline gain – attributable to Strait of Hormuz closure – inflationary pressures were also present in shelter, tariff-sensitive apparel, and household furnishings.
- Sticker shock hit wholesalers in April as inflationary pressures extended beyond just energy. The PPI Index increased 1.40% month-to-month, bringing the annual inflation rate to a sizzling 6%. That was the largest monthly and yearly increases since 2022. Excluding food and energy, core PPI rose 1% in April pushing the annual rate to 5.20%. The services side of the ledger saw prices accelerate 1.20% from the prior month. Two-thirds of that move was attributed to a gain in trade services, a sign that tariff costs could be starting to have a larger impact on prices.
- Wage gains, tax refunds, and a stabilizing jobs market kept consumers spending last month. In April, retail sales rose 0.50%. Excluding autos, sales increased a robust 0.70%. The headline figure received an outsized boost from – you guessed it – soaring energy prices, which drove gas station receipts up 2.80%. However, consumers appear confident in their financial situations, continuing to spend in discretionary categories. Sporting goods, electronics, and nonstore retailers saw sales rise 1.40%, 1.40%, and 1.10%, respectively.
Hot Inflation Cools AI Rally
An AI-fueled rally and resilient consumer spending carried the major indices back to recent highs, setting the stage for what looked to be another record close for the trading week. However, the rally fizzled on Friday as traders moved to take profits and a spike in U.S. Treasury yields signaled a cautious shift as investors headed into the weekend. Tech continued to be in focus, a day after a blowout earnings report from old-school tech giant Cisco Systems. Shares surged 13% after the networking company blew past its guidance for the fiscal year and lifted its forecast from $5 billion to $9 billion. Thursday also saw the first of what will be a parade of AI companies issuing IPOs in the coming months, all of whom hope to capitalize on the current frenzy. Cerebras Systems, maker of large-scale processors that provide supercomputer-level performance specifically focused on the AI inference layer (the generation of end-user output in response to new or unseen input prompts), jumped nearly 70% in its market debut. Bulls, however, were ultimately denied another record close as traders took profits from high flyers such as Intel and Micron Technology, whose shares have risen more than 100% year to date. Headwinds also emerged from the bond market as the 30-year U.S. Treasury yield topped 5.10%, its highest level since 2025. The move was driven by hot CPI and PPI reports, which showed inflationary pressures extending beyond the oil patch and reflecting an acceptance by traders that inflation will persist longer than expected. Thus far, however, high prices have not put much of a dent in the U.S. economy, with this week’s retail sales showing consumers continuing to spend in April (+4.9% YOY).
Through Thursday, it appeared markets would easily cruise to another record week; however, a revisiting of Tuesday and Wednesday’s inflation reports cast a sense of caution as the week drew to a close. Up until this week, investors have been living in a suspended state of reality, elated by massive earnings being generated by the AI supercycle, but outside of the price at the pump, inflation hadn’t been overtly problematic. This week’s batch of inflation reports was the first “official” reading to show inflation spreading from the pump to housing as well as goods and services. Broad-based inflation will be harder and harder to ignore as it begins to drag on the economy. The consumer has managed to hold up to inflation in large part because wages were growing at an even faster rate, but now that the pattern has reversed, it will begin to stress consumers’ wallets. With few signs that oil will begin flowing freely again anytime soon, investors are likely to spend the summer oscillating between their awe for all things AI and a growing concern that the consumer will finally run out of fuel.
The Week Ahead
Markets will be closed for Memorial Day. Week in Review will pause in observance. Our next edition arrives on May 29th with the latest durable goods and personal income and spending figures.
Cocodona 250 Makes History
For students, teachers, and parents in the final stretch of the school year, crossing the finish line means overcoming the hurdles of final exams, sport competitions, recitals, homework deadlines, parent conferences, and more. If you’re in the “Maycember” trenches or if perhaps you feel like you are barely making it through the work week or facing other challenges in life, here is a story that just might be the inspiration or motivation we didn’t know we needed.
There’s a sport known as “ultradistance running” that is growing in popularity. It’s generally defined as any distance longer than 26.2 miles (the length of a marathon). Ultras come in many formats. Some are one-day efforts like 50 kilometer races (31.07 miles), while others are multi-day events that are 200 miles or more. Just last week, an annual race called the Cocodona 250 took place in Arizona. It’s a roughly 253-mile point-to-point journey, meaning the course is not a loop or an “out and back,” but rather the course starts in Black Canyon City (about 40 miles north of Phoenix) and ends in Flagstaff, AZ.
The race tests athletes’ ability to traverse desert heat, pine forests, rocky mountain ridgelines, and long stretches of remote trail with dramatic weather and temperature changes along the way. Additionally, the Cocodona 250 has about 38,791 feet of elevation gain on the course – nearly the equivalent of climbing Mount Everest and continuing to run afterward. Athletes must strategize about how hard to hike the steeper climbs, when to run the flats, how long to spend at aid stations, and how to manage sleep deprivation. Over 250 miles, small mistakes compound. A few minutes lost to poor foot care, not changing wet gear, or inadequate calories can turn into hours of physical distress later. Success often depends on repetitive consistency—relentless, forward motion paired with smart decisions—and lots of mental fortitude.
The Cocodona 250 was established in 2021 and has quickly become a marquee annual event on the U.S. endurance running calendar. It attracts a wide range of runners from elite professionals and high-level amateurs to hundreds of everyday athletes – people with jobs and families who train for months or years for a shot at finishing within the 125-hour cutoff. It is one of the world’s toughest and most grueling ultradistance races.
This year’s event started with nearly 1,300 runners and delivered a landmark moment when the winner, Rachel Entrekin, a 34-year-old from Colorado, not only won the race but also became the overall course record holder with a time of 56 hours, nine minutes, and 48 seconds. She smashed the previous course record time by more than two and a half hours, and she shaved seven hours and 41 minutes off her personal best time, which she set last year. She was also the race’s first female winner. Her accomplishment is one of the most dominant performances in ultrarunning history. Entrekin credits her support crew and her minimalist sleep strategy, sharing that she took “dirt naps,” sleeping five minutes around mile 200, then taking two seven-minute naps around mile 230. The race’s second place finisher set a men’s course record of 57:28:36.
Entrekin also credits her Cocodona success to her mindset as much as to her physical ability, sharing that in a race this long, your attitude and your ability to combat stress is so important. After earlier races, she shared that her goal was to finish the race as a person that she could be proud of and stand behind. Entrekin said she adopted a mantra along the way that helped rally her toward a record-setting and history-making finish, which was, “Why not you? Why not now? Why not try?” In post-race interviews, she shared, “You can choose your attitude….so I’d rather choose to be positive.” When talking about meeting fellow racer Wayne Amo who was the last person to cross the finish line, just missing the official 125-hour cut off by less than 90 seconds, Entrekin shared her immense respect for Wayne and people like him who are “gritty and just get it done.” She believes that while her race went fairly smoothly and without a lot of low points, the real heroes are those who choose to keep going when things get really hard, even when you aren’t sure you will make it to the finish line. Amen to that!