Stocks initially struggled for direction Tuesday as investors took in the latest inflation data, a speech from Federal Reserve Chair Jerome Powell and another day of jaw-dropping gains in several meme stocks. However, a midday burst of buying power helped the main indexes close with comfortable gains.  

Starting with the inflation data. Ahead of the opening bell, the Bureau of Labor Statistics said the Producer Price Index (PPI), which measures what businesses are paying suppliers for goods, rose 0.5% from March to April and was up 2.2% year-over-year. Core PPI, which strips out volatile food and energy prices, rose 0.4% month-to-month and was 3.1% higher on an annual basis. 

The monthly figures for headline and core PPI were higher than economists expected, while the annual increases were the biggest since April 2023. This "adds to the evidence that inflation progress is stalling," says Elizabeth Renter, senior economist at NerdWallet. 

The data will also keep the Personal Consumption and Expenditures Index (PCE), the Fed's preferred inflation metric, elevated, Renter adds, and could fuel consumer inflation more directly if retailers "pass along the price growth they experience to their customers."

But while several media outlets said the PPI was "hot," Fed Chair Powell this morning categorized it as "actually quite mixed" thanks to a downward revision to the monthly headline PPI figure for March (-0.1% vs +0.2% initial reading).

The head of the central bank also said that while he believes inflation will move lower, his confidence "is not as high as it was" following recent economic reports. "We're just going to have to see where the inflation data fall out," Powell added, reiterating his data-dependent stance toward interest rates.

Meme stock rally continues

Today's busy economic calendar had to contend with an onslaught of single-stock headlines, several of which were centered around meme stocks. Indeed, GameStop ( GME ) continued this week's epic run higher – more than doubling at one point in intraday trading before ending the day up 60.1%. 

GME was joined in the plus column Tuesday by a number of other stocks with high short interest, including AMC Entertainment ( AMC ) and SunPower (SPWR, +59.6%).

Texas Instruments ( TXN ) logs longest win streak in 10 years

Texas Instruments ( TXN ) was a notable gainer Tuesday, rising 1.8% for its ninth straight win. This is the semiconductor stock's longest daily win streak since early 2014, according to Dow Jones Market Data.

In a note released Monday, Citi Research analyst Christopher Danely expressed optimism that the chipmaker will begin to see more consistent revenue growth in the second half of the year. 

And although Danely currently has a Neutral (Hold) rating on TXN, he believes "the margin bottom is approaching and once this is incorporated into consensus estimates – we could turn more optimistic."

Home Depot ( HD ) slumps on Q1 revenue miss

Elsewhere, Home Depot ( HD ) (HD, -0.1%) kicked off a busy stretch of retail earnings on a down note. While the home improvement retailer reported a bottom-line beat, revenue of $36.54 billion fell short. 

"We believe consumers continue to be cautious with their home improvement spending due to the high level of interest rates and housing prices," says John Tomlinson, global director of research at M Science. "Consumers continued to opt for smaller home improvement projects over larger ones given that big-ticket spending fell for the sixth straight quarter."

As for the main indexes, the Dow Jones Industrial Average gained 0.3% to 39,558, the S&P 500 added 0.5% to 5,246, and the Nasdaq Composite rose 0.8% to 16,511.