US Stocks Hit New Highs Again. Market Ignores Inflation Pressures, Focuses on Trump’s China Visit

TradingKey - On May 13, U.S. President Trump arrived in Beijing to hold high-level meetings with Chinese President Xi Jinping, accompanied by NVIDIA ( NVDA) CEO Jensen Huang and Tesla ( TSLA) CEO Elon Musk, as well as Apple ( APLE ), Meta ( META ), Visa ( V ), JPMorgan Chase ( JPM ), Boeing ( BA) and other tech executives and business leaders.

The market views this visit as a critical window for observing marginal easing in U.S.-China relations, with a particular focus on potential progress in AI chips, trade, and technological cooperation.

U.S. stocks maintained their strength that day, with the S&P 500 closing up 0.58% and the Nasdaq rising 1.2%, both hitting new record highs simultaneously, while the Dow fell slightly by 0.1%.

Performance of the three major U.S. stock indices. Source: TradingView

From a market perspective, the primary drivers behind the indices hitting record highs remain AI-related tech stocks, especially in the semiconductor sector. Individual stocks such as NVIDIA and Tesla were bolstered by this trip to China, as the market bets that Trump's talks with Chinese officials could open more room for U.S. tech companies in China, particularly in AI chips and high-end technology segments.

Investors are broadly focused on whether Trump and Xi will relegate trade friction to a secondary concern and instead shift more attention to collaborative opportunities in the AI industry and marginal changes in chip export restrictions.

Notably, the U.S. Producer Price Index (PPI) for April, released on May 13, recorded its largest monthly increase in four years, rising 6.0% year-over-year. Combined with Tuesday's CPI data, this indicates that U.S. inflationary pressure continues to intensify, which theoretically should dampen market expectations for a near-term rate cut and weigh on high-valuation tech stocks.

However, the market's focus that day was clearly on expectations of trade easing between the U.S. and China and the earnings resilience of AI companies, rather than dwelling on the hot inflation data. Morgan Stanley even raised its year-end target for the S&P 500 to 8,000 that day, citing strong corporate earnings, accelerated AI adoption, and a market that remains underpinned by fundamentals-driven growth.

The new record highs in U.S. stocks suggest that the market is still willing to pay a premium for a window of easing in U.S.-China relations and the continued expansion of the AI industry chain. For tech stocks, the direct significance of Trump's visit lies in allowing the market to re-evaluate the predictability of the Chinese market, chip exports, and multinational technological cooperation.