📊 Market Overview
The Producer Price Index (PPI) came in flat at 0.0% month-over-month versus the expected 0.2%, and the yearly rate slowed to 4.7% versus the 4.9% forecast. The softer-than-expected inflation reading — combined with yesterday’s in-line CPI — eased fears that the Fed (the Federal Reserve, America’s central bank) would need to tighten policy further. Tonight’s earnings report from Applied Materials (AMAT), a major chipmaking-equipment company, is the one event every tech investor should watch.
📊 Market Snapshot
Today’s PPI removes a layer of risk but doesn’t change the game — watch how the 10-year bond yield reacts before getting too excited.
📈 The Big Picture
Two big forces are shaping your portfolio right now. First, inflation is cooling just enough to keep the Fed from raising rates, which is good news for growth stocks like tech and semiconductors. But core prices (which strip out food and energy) are still running at 4.2% annually — too hot for the Fed to start cutting rates anytime soon.
Second, the AI infrastructure boom is accelerating with real revenue, not just hype. Coherent (COHR) reported that its order book for 2027 is nearly full with contracts extending into 2028. Cisco Systems (CSCO) saw AI-related orders from cloud companies hit $9.3 billion in 2026 — roughly 4.5 times last year. If you own tech stocks or broad market ETFs, the networking and optics layer around AI is becoming just as important as the chips themselves.
📖 Term of the Day
PPI (Producer Price Index): A measure of the average prices that manufacturers and producers receive for their goods — essentially inflation before it reaches consumers. Why you care today: Today’s PPI came in cooler than expected at 0.0% monthly, suggesting producer-level price pressures are easing, which could mean less inflation hitting your wallet down the road.
💼 Watchlist: 3 Stocks to Know Today
Coherent (COHR) — “The Sold-Out Factory”
Coherent beat revenue estimates with $2.05 billion versus the $1.99 billion expected and guided next quarter even higher. Its 2027 production capacity is nearly fully booked, with new orders already reaching into 2028 — a sign that demand for fiber optics used in AI data centers is outpacing supply.
Cisco Systems (CSCO) — “The Network Upgrade Play”
Cisco reported $17.3 billion in revenue, topping the $16.9 billion estimate, and guided next quarter to $18.0–18.2 billion versus roughly $16.8 billion expected. The company says an AI data center can generate about 14 times the traffic of a traditional one, meaning the entire networking layer needs a massive upgrade.
Applied Materials (AMAT) — “Tonight’s Earnings Wildcard”
Applied Materials reports after the bell today and the market wants to see whether investments in memory chips, advanced packaging, and AI equipment are translating into real orders. A strong report would confirm the spending boom across the entire chip supply chain.
💬 Esther’s Take
