Can Stocks Hold All-Time Highs With Inflation Running Hot?

NEW YORK — The S&P 500 hit 7,499.63 at midday Thursday — a fresh all-time intraday high — carried there by a networking giant’s best earnings day in twenty years and a geopolitical pivot in Beijing that traders had not dared to price in 48 hours ago.

The Currents Moving the Tape

Three forces converged Thursday morning and they have not pulled apart by midday. First: Cisco Systems’ third-quarter earnings blowout lit the technology sector, with the company raising its AI infrastructure and hyperscaler order guidance from $5 billion to $9 billion for the fiscal year — nearly doubling a figure that was already above consensus. Second: the Trump-Xi summit in Beijing produced a specific, tradeable headline — both governments agreed the Strait of Hormuz must remain a free waterway, with China committing to use its influence with Iran to help reopen the passage. Third: the U.S. Commerce Department approved sales of NVIDIA’s H200 AI chips to several Chinese firms, a direct policy reversal that sent semiconductor stocks higher across the board.

The Dow Jones Industrial Average reclaimed the 50,000 level — last held in February — gaining between 362 and 491 points depending on the session tick. The Nasdaq Composite reached 26,633.44, a fresh record. The Russell 2000, often the market’s honest signal on domestic economic confidence, lagged at +0.46%, which is not a warning sign yet but deserves attention as the afternoon unfolds.

Data Visual

Midday Index Performance vs. Previous Close — May 14, 2026

Shows the percentage gain of all four major U.S. equity indexes from their previous close to midday Thursday, illustrating the breadth of the rally.

Values in %

Brent crude, which spiked toward $107 in early trading on Hormuz anxiety, pulled back to $104.97 — still elevated but easing. That moderation matters because oil at $100-plus is the single largest transmission mechanism for the inflation problem that the Federal Reserve cannot yet declare solved. April’s retail sales data, released this morning at +0.5% month-over-month, confirmed the consumer is still spending — but gas station sales were the largest single category gainer at +2.8%, a direct consequence of elevated energy prices feeding through to the pump.

Cisco and the Semiconductor Complex — Reading the Signal Correctly

Cisco’s 14% intraday surge is the kind of move that warrants scrutiny beyond the headline. CEO Chuck Robbins used the phrase “networking supercycle” — language that, from a networking infrastructure company rather than a pure-play chip designer, carries real weight. The company simultaneously announced roughly 4,000 job cuts, approximately 5% of its global workforce, to redirect capital toward AI silicon, optics, and software. That is not a company paddling with the AI current; that is a company restructuring around it at cost.

For context on what this means for the broader tape, our earlier analysis of whether Cisco’s gap-up is the real signal in today’s tech rally walks through why networking infrastructure earnings tend to be a leading rather than lagging indicator for enterprise AI capex cycles. The short answer: when the pipes confirm demand, the chips that fill them follow.

Data Visual

Cisco AI Infrastructure Guidance Revision — Fiscal Year Orders ($B)

Illustrates the dramatic upward revision in Cisco’s AI and hyperscaler order guidance that drove the stock’s best single-day move in over two decades.

Values in $B

NVIDIA added between 1.77% and 4% through midday — the sixth consecutive session of gains — on news the H200 export approval covers several Chinese commercial firms. Jensen Huang attended the Beijing summit personally, alongside Apple’s Tim Cook and Tesla’s Elon Musk, a tableau that underscored how thoroughly the AI chip supply chain has become a geopolitical instrument. The PHLX Semiconductor Index has now gained 64% since the end of March — a move that has the Nasdaq 100’s RSI sitting at an eight-year high. That does not make the rally wrong. It does mean the margin for disappointment has compressed to near zero.

The question the consensus is not asking loudly enough: can technology stocks sustain this trajectory against a 6% wholesale inflation print that directly threatens the rate-cut calendar the entire growth trade is implicitly discounting? Yesterday’s PPI — headline at +1.4% month-over-month against a +0.5% estimate, core ex-food and energy at +1.0% against a +0.4% estimate — was not a rounding error. It was a signal, and the bond market’s relative calm at 4.45% on the 10-year is either sophisticated patience or a lag that corrects badly.

Where the Sectors Stand at Midday

Information Technology leads all sectors, with semiconductors providing the engine. 3M Company added 3.70%, Johnson & Johnson gained 1.61%, and UnitedHealth Group rose 1.00%, suggesting the industrials and healthcare names are participating rather than just watching. The energy sector sits in mixed territory — oil’s retreat from intraday highs is a mild headwind for energy equities even as the absolute price level remains supportive of earnings.

IBM is among the session’s notable underperformers, a reminder that not all technology is the same trade right now. The market is making specific bets on AI infrastructure — networking, chips, optics, data center power — and remaining skeptical of legacy enterprise software and services names that have not yet demonstrated a credible path into the new workload architecture. That selectivity is actually healthy price discovery, not a crack in the technology thesis.

The labor market data released this morning added a low-grade complexity to the picture. Initial jobless claims came in at 211,000 for the week ended May 9, above the 205,000 forecast and up 12,000 from the prior week. Continuing claims edged to approximately 1.78 million. Neither number constitutes deterioration in isolation — the four-week moving average at 203,750 remains historically low — but the directional drift is worth monitoring. A labor market that starts softening into a high-inflation environment limits the Fed’s already narrow options considerably. As we examined earlier this week, wholesale inflation may already be testing the Fed’s last line of defense before any policy pivot becomes viable.

Into the Close — Levels, Risks, and What Breaks the Trend

The afternoon setup centers on whether this rally can consolidate gains rather than extend them into a thin close. The S&P 500 at 7,499 is within touching distance of the psychologically significant 7,500 level — a round number that will attract both momentum buyers and profit-takers in equal measure. A close above 7,500 on strong volume would be a technically meaningful confirmation; a fade from here that settles the index back below 7,444 (Wednesday’s close) would suggest the morning’s enthusiasm was front-loaded on the Cisco and Beijing headlines rather than broadly distributed.

The VIX at 17.97 — slightly higher on the session — tells you the options market is not fully convinced this calm is durable. That is not a bear signal. It is a signal that institutional hedgers are not removing protection even as the tape prints new highs, which is rational behavior when the inflation data argues against the rate-cut scenario that underpins elevated equity valuations.

No major after-hours earnings are scheduled tonight that would rival Cisco’s impact, which means the afternoon will be driven by position management around these record levels rather than fresh fundamental catalysts. That makes price action itself the data. A broad, low-volume drift higher into the close would be a mild negative for conviction; a high-volume hold above 7,480 would be more constructive.

The afternoon setup is asymmetric in an interesting way. The bulls have three genuine catalysts — Cisco, Beijing, and chip exports — and a consumer that is still spending. The bears have a 6% wholesale inflation number, a Nasdaq RSI at an eight-year high, and a Fed that cannot cut rates into this data. For the rest of today’s session, the question is not who is right. The question is which side blinks first at the 7,500 line. Readers tracking the broader inflation picture should also review whether hot inflation is finally closing the door on rate cuts — because the answer to that question is what determines whether today’s all-time high is a foundation or a ceiling.