What Happened?
A number of stocks fell in the afternoon session after the April PPI report lifted the 10-year Treasury yield to a 10-month high of 4.49%, eliminating 2026 rate-cut expectations and raising the discount rate for long-duration growth valuations.
This ‘sticky’ inflation print also signaled that consumer real wages have turned negative (3.6% wages vs 3.8% CPI), which historically triggers a pullback in digital advertising budgets as brands protect margins.
Consumer internet companies like Google, Meta, Amazon, and Netflix, earn revenue from digital advertising and subscriptions. Their valuations are highly sensitive to Treasury yields, which set the bar for growth-stock multiples.
Two forces drove the reaction. First, the rate channel is direct: 10-month high yields mechanically reduce the present value of future earnings. Second, the demand channel: negative real wage growth signals that consumers are under pressure, and advertisers typically respond by tightening budgets. While the Q1 ad cycle was strong, the PPI suggested the macro environment was turning against the next quarter’s growth targets.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
Zooming In On Carvana (CVNA)
Carvana’s shares are extremely volatile and have had 37 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 21 days ago when the stock gained 3% on the news that President Trump extended a ceasefire with Iran.
The positive sentiment was reflected across the board, with the S&P 500, Dow Jones Industrial Average, and Nasdaq 100 all showing significant gains. This development provided a degree of relief to investors, reducing geopolitical uncertainty that had been weighing on the markets. A de-escalation in tensions is generally viewed as favorable for global economic stability, encouraging investment in riskier assets like equities as the perceived threat of a wider conflict diminishes.
