Wall St gains as AI earnings lift tech, inflation data supports rate-hold bets

Wall Street’s main indexes rose on Wednesday, with the Nasdaq outperforming peers as upbeat earnings from AI infrastructure firms boosted technology stocks, while largely in-line inflation data reinforced bets the Fed will hold interest rates steady.

Data showed U.S. consumer prices increased slightly in July, weakening the argument for the central bank to hike interest rates next month.

Traders are now pricing in a 55% chance of the U.S. Federal Reserve 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.

“These backward-looking numbers kind of put the Fed in exactly the position they want to be. They don’t have to do anything. It’s the narrative they want, that we’re seeing some cooling, but there’s no collapse in the economy,” said Luke Rahbari, CEO of Equity Armor Investments.

“But… we’ve had so many starts and stops to the war in the Middle East and wild swings in oil and gasoline,  that this could totally change day by day.”

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.

At 09:38 a.m. ET, the Dow Jones Industrial Average rose 110.53 points, or 0.21%, to 53,902.38, the S&P 500 gained 25.54 points, or 0.33%, to 7,753.74, and the Nasdaq Composite gained 168.73 points, or 0.64%, to 26,614.17.

The S&P 500 information technology sector jumped 1.2%, with chipmakers in the lead. Nvidia gained 2%, Micron Technology added 4.4% and Broadcom was up 1.4%.

The broader semiconductor index rose about 3% and was on track for its biggest one-day jump in more than a week.

CoreWeave surged 20% 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 7.8% and 5.5%, respectively. Neocloud company Nebius Group NBIS.O jumped 15.5%, helped by its second-quarter results.

Super Micro Computer topped the S&P 500 with a 17% climb after the AI-server maker forecast fiscal 2027 revenue above Wall Street expectations.

The earnings underscore robust AI-related demand as Wall Street giants continue to spend billions to scale up AI.

The gains brought the tech-heavy Nasdaq within 2% of a record high. The S&P 500 and the Dow have already scaled peaks last week as upbeat earnings lifted sentiment.

In other stocks, Cava Group advanced 17.5% after the restaurant chain beat Wall Street expectations for second-quarter sales and core profit.

Lumentum Holdings added 6.8% after the photonic product maker forecast first-quarter revenue above analysts’ expectations and beat fourth-quarter estimates.

Advancing issues outnumbered decliners by a 1.54-to-1 ratio on the NYSE and by a 1.53-to-1 ratio on the Nasdaq.

The S&P 500 posted eight new 52-week highs and one new low, while the Nasdaq Composite recorded 46 new highs and 39 new lows.