Inflation jumps, Altman's testimony, Huang joins Trump's China visit and more in Morning Squawk

• Energy prices rose 3.8% in April and nearly 18% annually due to surging oil prices from the Iran War, but inflation also reaccelerated in other categories signaling broad consumer pressure
• Fed funds futures traders now rule out rate cuts before end of 2027 and instead price in a rate increase by year-end; the S&P 500 declined in Tuesday's session following the inflation data
• OpenAI CEO Sam Altman testified in Musk's lawsuit, calling Elon Musk's management style 'demotivated' and his departure from OpenAI a 'morale boost'; Nvidia CEO Jensen Huang joined Trump's China visit after the president personally called to invite him

Market Summary: Inflation Surge Dominates as Fed Rate Cut Hopes Fade

Inflation Data

The Consumer Price Index (CPI) rose to 3.8% annually in April, marking the highest level since 2023 and moving further from the Federal Reserve's 2% target. Energy prices jumped 3.8% monthly and are up nearly 18% year-over-year, driven by surging oil prices amid the Iran War. Broad-based price pressures were evident across multiple categories. The S&P 500 fell 2% Tuesday as traders ruled out interest rate cuts before end of 2027 and now price in a 30% probability of a rate *increase* by year-end. Producer Price Index data is due Wednesday at 8:30 a.m. ET.

Corporate Developments

• OpenAI/Tesla: CEO Sam Altman testified in the Musk v. Altman trial, calling Elon Musk's management style "demotivated" and stating his departure from OpenAI was a "morale boost."

• Nvidia: CEO Jensen Huang confirmed to join President Trump's China visit after initially being excluded from the delegation. Trump personally called Huang following media coverage. Nvidia chips face tight U.S. restrictions on China sales.

• FDA Leadership: Marty Makary was removed as FDA Commissioner after a turbulent tenure marked by internal dysfunction. Kyle Diamantas will serve as acting commissioner, with HHS Secretary RFK Jr. making the decision.

Other Notable Items

• Senate advancing Fed governor confirmation votes
• Domestic box office up 88% last weekend, totaling $3 billion year-to-date (up 16% YoY)
• General Motors employees criticized company's handling of recent layoffs

Market Outlook: Equities opened higher Wednesday despite ongoing inflation concerns and diminishing expectations for monetary easing.