Wall Street’s S&P 500 and Nasdaq advanced Wednesday as strong results and forecasts from CoreWeave and other artificial intelligence infrastructure companies fueled technology shares while subdued July inflation increased expectations that the Federal Reserve will leave interest rates unchanged in September.
By yourNEWS Media Newsroom
The S&P 500 and Nasdaq Composite finished higher Wednesday as investors pushed artificial intelligence-related stocks upward following encouraging corporate results, while a relatively mild July inflation report eased concerns that the Federal Reserve could raise interest rates at its September meeting.
AI infrastructure companies were among the session’s strongest performers, led by CoreWeave after the cloud computing company exceeded second-quarter earnings expectations and raised its forecast for annual capital spending.
The results helped renew enthusiasm across companies tied to the construction and operation of the computing infrastructure needed for artificial intelligence.
Data center operators IREN and Applied Digital gained, while Nebius Group jumped after reporting second-quarter results that surpassed expectations.
Super Micro Computer also surged. The AI server manufacturer projected fiscal 2027 revenue above Wall Street forecasts, adding to the positive sentiment surrounding businesses positioned to benefit from continued spending on artificial intelligence systems.
Semiconductor companies joined the rally, with Nvidia and Micron Technology both advancing during the session.
The technology gains helped offset weakness in the Dow Jones Industrial Average.
According to preliminary closing data, the S&P 500 rose 20.38 points, or 0.26%, to 7,748.58. The Nasdaq Composite climbed 145.70 points, or 0.55%, to 26,588.49.
The Dow declined 30.28 points, or 0.06%, to finish at 53,761.57.
Investors were also responding to fresh consumer-price figures showing that inflation remained restrained in July.
U.S. consumer prices rose only slightly during the month as gasoline costs declined for a second consecutive month. Measures of underlying inflation were also benign, reducing market expectations that the Federal Reserve will need to increase borrowing costs when policymakers meet in September.
Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut, said the report relieved investors who had been concerned that inflation could prove stronger than anticipated.
“The numbers came in right in line. The market’s reaction is slightly positive because the market was fearful it was going to come in worse than it did. You’re seeing a market thinking that the Fed is not being pushed toward a rate hike,” Pavlik said.
Interest-rate expectations shifted notably following the inflation report.
Traders were pricing in a 62% probability that the Federal Reserve will hold rates steady at its September meeting, according to CME’s FedWatch Tool. Before the July consumer-price data were released, expectations had been approximately evenly divided between a rate increase and no change.
The combination of softer inflation pressure and strong earnings from companies associated with artificial intelligence gave investors two sources of support: diminished concern about tighter monetary policy and renewed optimism that heavy spending on AI computing capacity remains intact.
CoreWeave stood at the center of that optimism after increasing its capital expenditure outlook. The company’s stronger-than-expected quarterly earnings reinforced expectations of continued investment in the computing infrastructure required to develop and operate artificial intelligence applications.
The gains spread broadly across the sector, encompassing cloud computing, data centers, servers, semiconductors and optical technology.
Lumentum Holdings surged after the maker of photonic products issued a first-quarter revenue forecast above analysts’ expectations. The company also reported fourth-quarter results that exceeded estimates.
Outside the technology sector, Cava Group advanced after the restaurant chain surpassed Wall Street forecasts for both second-quarter sales and core profit.
Geopolitical developments remained a source of uncertainty for markets as tensions involving the United States and Iran continued.
A senior Iranian source said there had been no progress in negotiations aimed at reviving the interim agreement reached in June or establishing a timetable for implementing it. Shipping attacks were also continuing, adding to volatility surrounding the conflict between the two countries.
Despite those concerns, Wednesday’s trading was dominated by developments in inflation, Federal Reserve expectations and the artificial intelligence sector.
The July inflation figures reduced the perceived likelihood that policymakers will need to tighten monetary policy again next month, while results from CoreWeave and several other AI-linked companies strengthened investor confidence in continued spending on data centers, servers and other computing infrastructure.
With traders now assigning a greater probability to unchanged rates in September, the S&P 500 and Nasdaq closed the session higher, while the Dow ended slightly lower.
Original article
Comments