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All three main equity indexes opened lower after the hottest consumer inflation report since May 2023 seemed to burn all hope for lower interest rates anytime soon. But blue chip stocks lifted the oldest of the benchmarks into the green late in a generally “risk-off” trading session.

The April CPI report showed the Consumer Price Index rose 0.6% month over month and 3.8% year over year. Core CPI, which excludes energy and food prices, was up 0.4% on a monthly basis and 2.8% annually. The energy index was up 3.8% in April, accounting for more than 40% of the headline CPI acceleration, and increased by 17.9% compared to April 2025, according to the Bureau of Labor Statistics.

At the same time, the front-month West Texas Intermediate crude futures contract was up 4.3% to $102.27 per barrel. WTI is up 60.6% from where it was a year ago and 52.6% since the war between the U.S., Israel and Iran began on February 28.

Meanwhile, the Senate confirmed Kevin Warsh for a seat on the Federal Reserve’s Board of Governors, further clearing the way for President Donald Trump’s nominee to replace outgoing Fed Chair Jerome Powell on Friday. Following a better-than-expected April jobs report, accelerating inflation rather than stagnating employment is shaping up to be the Fed’s initial priority in a Warsh regime.

Energy stocks were among six of 11 sectors in positive territory on Tuesday, with healthcare and consumer staples stocks up 1.9% and 1.6%, respectively, and financial stocks also posting solid gains.

Semiconductor stocks sold off, with Intel (INTC, -6.8%) and Micron Technology (MU, -3.6%) falling hard amid triple-digit runs so far this year. Walmart (WMT, +2.2%) and blue-chip dividend stocks UnitedHealth Group (UNH, +3.1%), and Coca-Cola (KO, +1.8%) caught significant bids.

By the closing bell, the Dow Jones Industrial Average had added 0.1% at 49,760, but the broad-based S&P 500 was down 0.2% at 7,400, and the tech-heavy Nasdaq Composite had declined 0.7% to 26,088.

CAT dragged on the Dow

Caterpillar (CAT, -1.5%) was one of the worst-performing Dow Jones stocks on Tuesday after it featured prominently in a Bloomberg story about stretched valuations for names tied to artificial intelligence.

The heavy equipment maker had behaved more like a hot tech stock than even the leader of the AI revolution so far in 2026, with a year-to-date gain of 62.5% through Monday compared to 60% for the VanEck Semiconductor ETF (SMH, -2.6%) and 17.7% for Nvidia (NVDA, +0.6%).

According to Renaissance Macro Research, CAT and other industrial stocks such as Vertiv Holdings (VRT, -0.2%), Eaton (ETN, -4.2%) and Cummins (CMI, +0.3%) are more than 60% correlated to SMH.

“These are not tech stocks,” Renaissance Macro Head of Research Neil Dutta told Bloomberg. “They trade like tech stocks because their order books have become AI capex order books.”

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As Jefferies analyst Stephen Volkmann observes, Caterpillar reported a 32% increase in sales of large generators and turbines and sequential order backlog expansion of $12 billion for the first quarter.

Management also boosted its full-year revenue guidance to low double-digit growth because of strong nonresidential construction driven by the data center and AI infrastructure buildout.

Quantum computing stocks are all over the place

Quantum Computing (QUBT) was up 15.7%, but D-Wave Quantum (QBTS) was down 7% — a share-price “superpositioning” that oversimplifies yet illustrates one of the key ideas you’ll want to understand if you’re researching ways to invest in quantum computing.

According to Microsoft (MSFT, -1.2%), “Superposition is a fundamental concept in quantum mechanics, describing the condition in which a quantum system can exist in multiple states or configurations simultaneously.”

Quantum Computing, better known as QCi, rallied after management reported first-quarter revenue of $3.69 million, up from $39,000 a year ago and ahead of a Wall Street estimate of $3.13 million.

D-Wave, on the other hand, sold off after management reported a first-quarter revenue decline of 80.9% to $2.9 million. D-Wave recorded a single large sale that boosted last year’s top line, but Wall Street expected to see $4.2 million.

“The potential of quantum computing is enormous,” Kiplinger contributor Tom Taulli writes, with the potential to create hundreds of billions of dollars in economic value over the next decade-plus.

In the meantime, however, quantum stocks are likely to be all over the place.

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