Stock market today: Dow slides, S&P 500 and Nasdaq rise as PPI inflation data comes in hot

Energy prices have captured investor attention as the war in Iran has sent oil (BZ=F, CL=F) surging, but strength in other commodities has been “equally notable this year,” Adam Turnquist, chief technical strategist at LPL Financial, wrote in a client note published Wednesday.

The Bloomberg Commodities ex-Energy index, which measures the performance of a basket of commodities outside of the energy sector, notched an all-time high on Wednesday. The index has spent April and May breaking through the previous 2011 high on the back of a China-fueled supercycle.

Not only has energy rallied this year, but metals have also surged, led most prominently by silver (SI=F) and copper (HG=F), where demand from a combination of tight supply, export restrictions, and the build-out of AI and electric vehicles have sent futures up 67% and 30%, respectively, on the two metals over the past six months.

At the same time, the closure of the Strait of Hormuz during the war in Iran has choked off major global supplies of fertilizers, putting upward pressure on a basket of agricultural commodities already up on a past year of global extreme weather events.

The run-up could have wide-ranging consequences for a US economy already facing sticky inflation, further confirmed this week by hotter-than-expected CPI and PPI reports, Turnquist said.

“If sustained, rising prices across industrial metals, precious metals, and agricultural commodities (not just oil) could create broader inflationary pressures by lifting input costs across manufacturing, construction, transportation, and food production,” Turnquist said.

“That dynamic could make it more difficult for inflation to moderate in the months ahead, even if energy prices eventually stabilize.”