The S&P 500 rose 0.2% on Wednesday after July's inflation report matched Wall Street's expectations, easing pressure on the Federal Reserve to raise rates. Artificial intelligence stocks led the gains after CoreWeave and Super Micro Computer posted strong quarterly results.
The S&P 500 climbed 0.2% on Wednesday, the Nasdaq Composite added 0.5%, and the Dow Jones Industrial Average traded near the flatline, as a tame inflation report combined with strong earnings from artificial-intelligence companies to lift stocks.
Inflation matches forecasts
July's consumer price index rose 0.1% on the month, putting the annual rate at 3.4%, matching consensus estimates from economists polled by Dow Jones. Core CPI, which excludes food and energy, advanced 0.2% monthly and 2.5% annually. Both annual figures marked a slight decrease from June.
However, the Federal Reserve has stayed focused on inflation's effect on U.S. consumers. Three dissenters at its last meeting voted to raise rates. Those concerns have yet to fade: U.S. oil prices pushed above $83 a barrel Wednesday as hopes for reopening the Strait of Hormuz dwindled.
Rate-hold odds climb
Following the report, traders raised bets that the Fed will leave rates unchanged next month. Fed funds futures now price in a roughly 58% chance the central bank holds its benchmark rate in the current 3.50% to 3.75% range, up from more than 45% a week earlier.
According to Morgan Stanley Wealth Management's Ellen Zentner, more inflation data will arrive before the Fed's September meeting: "There will be another round of inflation data before the September FOMC meeting."
AI earnings lift chipmakers and cloud stocks
Quarterly results reassured investors that AI-infrastructure demand remains stable. CoreWeave shares jumped 18% after its second-quarter adjusted operating income margin of 5% exceeded expectations, and revenue doubled from a year earlier. Super Micro Computer added 13% following a strong earnings and revenue forecast for its first quarter.
Other AI-related names also gained. Dell Technologies and Micron Technology advanced more than 4% and 6%, respectively. Cisco Systems rose more than 2%. U.S.-listed shares of Nebius were up more than 16%.
Source: US Top News and Analysis
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