Chip Stocks Rally as US May CPI Data Approaches

AI semiconductor stocks extended their recovery on Tuesday, pushing the Nasdaq higher, as markets positioned ahead of the US May consumer price index data scheduled for release on Wednesday morning.

The Nasdaq Composite gained 0.9% on Monday, extending the rally into Tuesday's session. Nvidia, AMD, Broadcom, and Marvell Technology, which collectively fell between 8% and 17% during Friday's selloff, led the gains. The S&P 500 recovered a portion of its Friday loss of 2.6%.

The backdrop: the Bureau of Labor Statistics reported on Friday that US nonfarm payrolls for May came in at 172,000, more than double the 85,000 consensus estimate. The strong jobs data pushed the 10-year Treasury yield to 4.57% and markets fully priced in a Federal Reserve rate hike before year-end.

Why the Recovery in Chip Stocks

AI semiconductor stocks fell sharply on Friday because they sit at the long end of the equity duration spectrum. When Treasury yields rise, the present value of future earnings falls most steeply for companies with distant profit horizons, including the AI infrastructure names.

The Monday-to-Tuesday rebound reflects two factors. First, investors with short-term horizons bought the dip in a sector that has gained more than 60% over the past year. Second, the May jobs data, while strong, included no acceleration in wage growth. Year-on-year wages grew 3.4%, unchanged from April, reducing the inflation-via-wages channel that concerns the Federal Reserve most.

For equity investors, the chip stock move is a leading indicator of how markets are reading the rate path. A sustained recovery in Nvidia, AMD, and peers signals that Friday's repricing may have already run its course.

What the CPI Print Needs to Show

The US Bureau of Labor Statistics releases May CPI data on Wednesday, June 10, at 8:30 am Eastern time.

Key figures the market will focus on:

• Headline CPI: consensus forecast 3.4% year-on-year, down from 3.7% in April
• Core CPI (ex food and energy): the primary signal for the Federal Reserve; consensus 3.1%
• Month-on-month change: April posted +0.4%, driven largely by energy

If the headline print comes in above 3.6%, Treasury yields will likely climb again, and the AI chip recovery will face an immediate test. A reading at or below 3.4% would give investors room to maintain the positions they rebuilt on Monday and Tuesday.

The energy component is the key variable. Brent crude has fallen from $107 to around $97 since April, following the Iran-US talks. If that drop filters through to May petrol prices, the headline number could ease more than the consensus expects.

ECB Decision Follows on Thursday

Twenty-four hours after the CPI release, the European Central Bank Governing Council meets on Thursday, June 11. Markets are pricing a 99% probability of a 25-basis-point rate increase, which would take the deposit facility rate to 2.25%.

For investors with European equity or fixed-income exposure, the sequencing matters. A below-expectations CPI print on Wednesday, followed by a widely expected ECB hike on Thursday, would give markets a relatively contained policy week. A CPI surprise in either direction before the ECB decision would complicate the signal.

Investors tracking diversified portfolios across both US and European assets face a week in which two of the world's most-watched policy decisions arrive within 24 hours.