Here is Schwab's early look at the markets for Wednesday, May 13.

Following yesterday's slightly warm Consumer Price Index, investors await what could be a relatively hot Producer Price Index (PPI) at 8:30 a.m. ET thanks to rising energy costs. Cisco earnings are due after the close and investors likely will monitor headlines from China as President Trump begins his visit there, accompanied by many U.S. executives.

Analysts see PPI, which measures wholesale costs, rising by 0.4% month over month on a headline basis, and 0.3% on a core basis that excludes food and energy.

Though the monthly numbers might not raise too much alarm, annual estimates look a bit more concerning, at 4.9% for headline and 4.3% for core. Those kinds of readings haven't been seen in more than three years and come as a stalemate persists in the Persian Gulf, sending crude prices above $100 per barrel Tuesday with 20% of the world's crude unable to reach the market.

Crude's 4% rise yesterday came as President Trump considered new military action against Iran, CNN reported, though any move likely wouldn't come during Trump's trip to China.

The headline PPI doesn't worry analysts as much as core, because headline reflects what's obvious to anyone who's pumped gas lately. The worry is that high energy costs will show up in core metrics, reflecting the importance of energy across the economy in almost every product. The sharp rally in AI-related stocks over the last month might reflect investors thinking these products aren't as exposed to energy inflation as many other things, but even semiconductors and data centers require fuel.

Yesterday's CPI sparked worry on Wall Street beyond the headline, featuring early signs that rising energy costs are maneuvering their way insidiously into the economy.

While the headline number included an unsurprising 18% year-over-year increase in the price of energy, core measures excluding energy costs also showed strain. Monthly CPI gains met consensus with headline inflation up 0.6% and core, up 0.4%, but annual gains topped estimates at 3.8% and 2.8%, respectively for headline and core. Analysts had expected 3.7% and 2.7%.

"The headline annual number was very hot, but that was to be expected given the situation in Iran," said Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "Core beat expectations and is moving in the wrong direction, which weakens the case for Fed rate cuts in the near-term."

Airline fares rose 20.7% year over year and transportation costs rose 7.1% year over year, CPI showed.  Shelter costs climbed 0.6% month over month, and apparel also rose 0.6%.

Another point of concern is inflation versus wages. With headline inflation up 3.8% year over year, that means real average hourly earnings growth, adjusted for CPI, slipped into negative territory for the first time since April 2023, said Kevin Gordon, head of macro research and strategy at SCFR.

Meanwhile, so-called "supercore CPI," which doesn't include housing, food, or energy, rose almost 3.4% year over year in April. This reading is one closely followed by the Fed, as it removes certain price elements that might be temporary.

"It's still unclear how long oil prices will stay elevated – the longer they remain higher, the higher the potential of inflation to make its way into other areas of the economy (excluding gas prices) and higher inflation getting embedded into expectations," said Nathan Peterson, director of derivatives research and strategy at SCFR.

Treasury yields rose after CPI, with the benchmark 10-year note yield up five basis points to 4.46%. This year's high is 4.48%, and rising yields already weighed on stocks to some extent Monday before CPI.

Yields extended their gains across the curve later Tuesday after a $42 billion 10-year auction saw what Briefing.com called "poor" demand. The 30-year yield climbed above 5% to post its highest close in almost a year, and the 2-year hit 4%. The dollar, however, found some buyers as a political stalemate continued in the U.K. and war worries might have triggered some "safe haven" buying. The dollar remains near the middle of its near-term range.

After CPI, chances of the Federal Reserve cutting rates this year fell below 3%, about as low as it's been all year,, according to the CME FedWatch Tool. Chances of a hike, however, now top 35%, up from 23% before the CPI data.

Beyond data and Treasury auctions, this week includes President Trump's planned visit to China where he'll talk with Chinese President Xi. AI and trade-related topics could be discussed.  

The war could be up for discussion as well, though it's unclear how much influence Xi has to push warring parties back from their stalemate despite China's close trading relationship with Iran.

Checking earnings in a light week, Alibaba and Cisco both report today and Applied Materials goes tomorrow.

Last time out, in February, Cisco topped analysts' earnings and revenue estimates but appeared to disappoint with quarterly earnings guidance that merely met the consensus view when analysts had hoped for "a beat and a raise," to borrow a Wall Street slogan.

Typically, Cisco's networking business is the key element. It rose 21% in the previous quarter. Any signs of progress in Cisco's push to take a more central AI role will also be watched, so investors might want to check for demand Cisco reports from so-called "hyperscalers." Cisco, like others in the industry, faces higher prices, so the impact from that on margins is worth noting.

Major indexes spent most of Tuesday below sea level, with the S&P 500 Index and the Dow Jones Industrial Average managing to claw back to relatively flat by end of day even as the tech-heavy Nasdaq Composite and the rate-sensitive Russell 2000 small-cap remained under water. Volatility, which had been heading up, retreated slightly, a potentially positive sign if it persists.

Meanwhile, technical indicators suggest both the S&P 500 Index and Nasdaq-100®  are stretched. The only precedent for the S&P 500 being at record highs with less than 60% of its members above their 50-day and 200-day moving averages was December 1998 to March 2000.

Six of 11 S&P 500 sectors posted gains Tuesday despite the market's drop, suggesting broader interest after nearly 300 of 500 S&P names fell Monday amid a slight rally. Health care led, and info tech finished dead last, hurt by profit taking in the chip sector after its wild ride. Health care might have been helped by news that Marty Makary resigned as commissioner of the Food and Drug Administration (FDA) after what CNBC called a "controversial" tenure.

Among other individual movers Tuesday, Hims & Hers dropped almost 14% after reporting an annual quarterly loss higher than a year earlier. Average monthly revenue per prescriber fell, too, for the telehealth company, and guidance disappointed some investors.

Boeing descended 2%. The industrial giant announced 47 airplanes delivered last month and 135 new orders. Deliveries were close to the March total but below February, and up from 45 a year earlier. Boeing's CEO is heading to China with President Trump, which has some investors hoping for a deal announcement of some sort.

Memory chip stocks—on a roll recently amid shortages and rising product prices—headed lower Tuesday in what could be profit taking. SanDisk fell 7% while Micron and Western Digital fell 5% and 6%, respectively.

The rest of the chip sector also appeared less vigorous, with Intel down more than 7%, but news flow was thin. The PHLX Semiconductor Index hit another new high Monday, but there's potential for more profit taking if Trump's meeting in China doesn't result in meaningful progress on the Iran conflict, Peterson said. China buys 80% of Iran's oil, so it arguably might want a resolution.

Qualcomm fell almost 12% after a strong showing Monday. Caution expressed Tuesday by a well-known analyst appeared to hurt shares. The analyst appeared skeptical about Qualcomm establishing itself as a major AI data center player.

Technology stocks sagged in general yesterday, even beyond chips, possibly a sign of "risk-off" moves by investors concerned by rising crude, higher yields, and lack of progress on Iran. One day isn't a trend, however.

Humana rose 8% and UnitedHealth was up 3% late as health care stocks found buyers on the FDA news and in what appeared to be a slight rotation into beaten-down sectors. Staples also performed well, along with energy, though rising yields often hurt dividend-paying stocks that tend to congregate in the more defensive regions of the equity market.

Under Armour toppled 17% after earnings per share missed consensus estimates and the company also provided below-consensus guidance, expecting revenue to fall year over year in fiscal 2027. The company is going through a restructuring plan that's exceeding cost estimates.

Wendy's heated up 16% as The Financial Times reported that Nelson Peltz's activist firm Trian Fund Management is in talks to raise funds for Wendy's go-private bid.

The Dow Jones Industrial Average® ($DJI) rose 56.09 points Tuesday (+0.11%) to 49,760.56; the S&P 500 Index (SPX) slipped 11.88 points (-0.16%) to 7,400.96, and the Nasdaq Composite® ($COMP) fell 185.92 points (-0.71%) to 26,088.20.