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

Wall Street experienced a surge on Wednesday, with major indexes such as the Nasdaq leading the gains as AI infrastructure companies reported positive earnings, while inflation data released showed minimal movement. This data supported the notion of the Federal Reserve holding interest rates steady, with traders now betting on a 55% chance of a rate hold at the September meeting, according to the CME’s FedWatch Tool.

Prior to the release, the market was divided between expectations of a rate hike and no change. Luke Rahbari, CEO of Equity Armor Investments, noted that the data provided the Federal Reserve with an ideal situation, as they did not have to make any changes and were positioning themselves for a narrative of cooling but not collapsing economy.

The volatility in the Middle East, coupled with elevated energy prices, had previously fueled rate-hike bets and kept Fed Chair Kevin Warsh cautious on forward guidance. The Dow Jones Industrial Average climbed 110.53 points or 0.21% to 53,902.38, the S&P 500 added 25.54 points or 0.33% to 7,753.74, and the Nasdaq Composite surged 168.73 points or 0.64% to 26,614.17.

The S&P 500's IT sector saw a 1.2% increase, with chipmakers leading the charge. Nvidia rose 2%, Micron Technology gained 4.4%, and Broadcom increased by 1.4%. The broader semiconductor index experienced a 3% jump and was poised for its largest one-day gain in over a week. CoreWeave saw a remarkable 20% rise after the AI cloud company revised its annual capital spending forecast and outperformed earnings estimates.

Other AI infrastructure providers, including IREN and Applied Digital, also saw gains of 7.8% and 5.5%, respectively. Neocloud company Nebius Group skyrocketed 15.5% after posting strong second-quarter results. Super Micro Computer led the S&P 500 with a 17% surge after forecasting fiscal 2027 revenue above Wall Street expectations.

These earnings highlighted the robust demand for AI-related services as major Wall Street firms continue to invest billions to expand AI capabilities. The tech-heavy Nasdaq was inching closer to a record high, while both the S&P 500 and Dow Jones had already reached their peaks last week due to positive earnings. Advancing stocks outnumbered decliners on both the New York Stock Exchange and Nasdaq, with the S&P 500 hitting eight new 52-week highs and the Nasdaq Composite recording 46 new highs and 39 new lows.