Inflation spikes to 3.8%, raising odds of another Fed rate hike and cooling Wall Street's AI rally.

Inflation in the U.S. surged to 3.8% in April, the highest since May 2023, driven by energy and transportation costs amid geopolitical tensions. Producer inflation also jumped sharply, fueling concerns about persistent price pressures. This has led bond markets to price in a more than 50% chance of another Federal Reserve rate hike by year-end, signaling that interest rates may remain higher for longer. Meanwhile, Ford's shares rallied strongly after Morgan Stanley highlighted the growth potential of its new energy division, but overall, the market faces uncertainty as rising inflation challenges the recent AI-driven stock rally.