Dow Jones and S&P 500 Climb Thursday as Wall Street Shakes Off Three-Day Slump Before SpaceX IPO

The Producer Price Index rose 1.1% in May, above the 0.7% expected, with energy costs driving about 80% of the increase and year-over-year wholesale prices up 6.5%, the biggest rise in over three years. Semiconductors led a bounce, with Lam Research up 8.4% and Micron up 3.6%, while Alphabet fell 2.2% and Oracle was down as much as 12.9% after earnings. Markets also weighed a potential Friday SpaceX debut at a $1.75 trillion valuation, which some analysts think is contributing to this week's tech selling.

Analysis

The immediate winners are the semi capex chain and the AI infrastructure complex, but the more interesting effect is that this is a selective relief rally, not a broad risk-on move. LRCX and MU are the cleaner expression of “AI demand survives higher rates/inflation,” while ORCL’s selloff suggests the market is now discounting the financing and depreciation burden of hyperscaler-style spending rather than rewarding top-line acceleration. That is a second-order negative for any vendor whose growth story depends on customers spending aggressively upfront and waiting for returns later.

Inflation’s composition matters more than the headline: an energy-led PPI pop is usually less damaging to long-duration tech than a services-led print, but it still tightens near-term earnings psychology because it raises input-cost expectations without forcing the Fed to look through it entirely. The market is likely underappreciating how quickly this can rotate from “transitory commodity noise” into margin pressure for hardware, transportation, and lower-quality software names over the next 1–2 quarters if crude stays bid.

SpaceX’s expected debut creates a temporary liquidity overhang for public tech multiples. The likely mechanism is portfolio funding rotation rather than pure risk aversion, which means the pressure is most acute in crowded, liquid winners—especially mega-cap AI proxies—while less-owned semis may actually recover faster once the event is absorbed. The fact that GOOGL is moving indexes more than the semiconductor tape reinforces how concentrated passive exposure has become: index behavior can look constructive even while breadth is fragile.

The contrarian read is that the market may be overestimating the durability of the tech pullback’s “funding effect” and underestimating how quickly a hot PPI can narrow the Fed’s tolerance for easing rhetoric. If geopolitical risk cools and oil retraces, the inflation scare could fade faster than consensus expects; but if it doesn’t, the next leg down would likely hit ORCL-style capex beneficiaries and high-multiple AI infrastructure names first, not the semis that are already washing out and being bought on weakness.

Key Decisions for Investors

• Long LRCX / short ORCL for 2-6 weeks: favor the names tied to immediate AI-driven equipment demand over the one with capex-heavy buyer skepticism; use ORCL strength or post-event rebounds as the entry.
• Buy MU on weakness with a 1-2 month horizon: the stock is acting as a high-beta proxy for semi cycle recovery, but risk/reward is better than crowded mega-cap AI names if the correction exhausts.
• Short a basket of crowded mega-cap AI beneficiaries into the SpaceX debut window (e.g., GOOGL or a basket ETF) against a long cash/T-bill sleeve: this targets temporary funding rotation rather than a structural thesis.
• Avoid adding to ORCL for now; if kept, hedge with a short-duration call spread or reduce exposure until the market digests capex guidance and financing sensitivity over the next 2-4 weeks.
• If WTI holds above the current tape for several sessions, initiate a small short in rate-sensitive high-multiple software as an inflation hedge; the trade only works if energy remains bid, so keep tight risk limits.