AI-fueled tech rally rolls on while inflation stays too hot for comfort

Stocks felt like they were doing the impossible again today: climbing steadily even while the economic dashboard flashed “hot inflation, meh growth.” If you’re looking at new highs in tech and wondering, “Is this real or just 1999 all over again?”, you’re not alone.

The spine of the day: AI/tech up, inflation still sticky

Big picture: U.S. stocks rose, led by the Nasdaq, with the S&P 500 up about half a percent and small caps keeping pace. This wasn’t just a couple of mega-caps pulling the index: the average stock did better than the S&P, and more than half of names finished higher.

The star again was tech and anything tied to AI. The tech sector jumped over 1%, with heavyweights like Microsoft and AMD up more than 3–4%, and Marvell also ripping higher. Semiconductors are in what some are calling a “most hated” rally: prices keep rising even while plenty of traders are betting against them.

On the flip side, the market dumped its safety blankets. Utilities fell more than 1%, real estate and financials slipped, and low-volatility funds were down even as high‑beta (more volatile) stocks gained over 1%. In plain terms: investors chose speed over seatbelts.

The economic mix: hot prices, soft-ish growth

Today’s key inflation report, the PCE index the Fed watches most closely, showed prices up about 3.8% from a year ago, higher than a few months back and still well above the Fed’s 2% goal. Month-to-month core inflation cooled a bit versus expectations, but not enough to declare victory.

At the same time, first‑quarter GDP was revised to about 1.6% annualized – not recessionary, but a clear comedown from earlier strength. Personal spending is still growing, but incomes essentially flatlined. Jobless claims ticked up slightly. It’s that awkward mix: prices too high, growth not exciting.

Fed officials leaned into that story, saying risks are tilting toward inflation and even hinting that another rate hike can’t be totally ruled out. Yet bond yields barely moved and the market’s “fear gauge” (the VIX) stayed low, signaling that investors aren’t panicking about policy…at least not today.

What this means for your risk right now

For a portfolio, today says two things at once:

• The market is still rewarding growth, AI, and riskier names, and the advance is broadening beyond just a handful of giants.