AI earnings lift S&P 500, Nasdaq as inflation data calms rate-hike jitters

NEW YORK: The S&P 500 and the Nasdaq rose on Wednesday as upbeat earnings from AI infrastructure firms boosted technology stocks, while largely in-line inflation data reinforced bets the US Federal Reserve will hold interest rates steady in September.

The S&P 500 information technology sector jumped 1.2 percent, leading sector gains on the benchmark index as investors bet on AI-fueled demand sustaining momentum.

CoreWeave surged 19 percent after the AI cloud company lifted its annual capital spending forecast and topped second-quarter earnings estimates.

Other AI infrastructure providers also rose, including data-center operators IREN and Applied Digital, which gained 7 percent and 3.4 percent, respectively. Neocloud company Nebius Group jumped 25 percent, helped by second-quarter results.

Super Micro Computer topped the S&P 500 with a 15 percent climb after the AI-server maker forecast fiscal 2027 revenue above Wall Street expectations.

Chipmakers gained, with Nvidia rising 2.6 percent and Micron Technology adding 6.4 percent. The broader semiconductor index advanced about 3.1 percent and was on track for its biggest one-day jump in more than a week.

“(AI trades) have more to run for good reason. There’s tremendous funding ahead and revenue scale for many… there’s further legs ahead. The demand for compute is at record highs,” said Eric Schiffer, chairman of The Patriarch Organization, a Los Angeles-based family office.

“You’re going to see continued signs and signals and deals and funding related to AI and AI has been powering this market.”

At 11:59 a.m. ET, the Dow Jones Industrial Average rose 9.21 points, or 0.02 percent, to 53,801.06, the S&P 500 gained 14.39 points, or 0.19 percent, to 7,742.59 and the Nasdaq Composite gained 102.48 points, or 0.39 percent, to 26,547.92.

The gains brought the tech-heavy Nasdaq within 2.2 percent of a record high. The S&P 500 and the Dow have already scaled peaks last week as upbeat earnings lifted sentiment.

Wall Street’s fear gauge, the CBOE Volatility Index, briefly touched a seven-month low and was last down 0.49 points at 14.79.

Investors also assessed US consumer prices data, which increased slightly in July, weakening the argument for the central bank to hike interest rates next month.

Traders are now pricing in a 62 percent chance of the Fed holding rates at its September meeting, according to CME’s FedWatch Tool. Before the data was released, they were split between a hike and no change.

Economic data, especially inflation figures, have drawn increased scrutiny as elevated energy prices due to the Middle East conflict raised rate-hike bets and Fed Chair Kevin Warsh stayed firm on muted forward guidance.

The situation in the Middle East remained volatile as a senior Iranian source said there had been no progress in talks to revive the interim deal agreed in June and define a timeframe to implement it, while shipping attacks continued.

In other stocks, Cava Group advanced 13.3 percent after the restaurant chain beat Wall Street expectations for second-quarter sales and core profit.

Lumentum Holdings added 15 percent after the photonic product maker forecast first-quarter revenue above analysts’ expectations and beat fourth-quarter estimates.

Advancing issues outnumbered decliners by a 1.4-to-1 ratio on the NYSE and by a 1.25-to-1 ratio on the Nasdaq.

The S&P 500 posted 15 new 52-week highs and two new lows, while the Nasdaq Composite recorded 79 new highs and 74 new lows.