U.S. stocks finished higher on Wednesday as the S&P 500 and Nasdaq 100 gained, supported by a combination of upbeat AI-related earnings news and a cooling U.S. inflation read that eased pressure on interest-rate expectations. The S&P 500 rose 0.26%, the Dow slipped 0.04%, and the Nasdaq 100 climbed 0.74%, with September S&P and Nasdaq futures also edging higher.
Shares gained traction after CoreWeave and Super Micro Computer reported results that beat expectations, while market focus shifted to the latest inflation data. July CPI came in line with forecasts, and investors trimmed the probability of an additional rate hike by the Federal Reserve at the next FOMC meeting.
Key takeaways
- Stocks: The S&P 500 rose 0.26% as AI and chip names led; the Dow fell 0.04%.
- Catalyst: Better-than-expected earnings and guidance from CoreWeave and Super Micro Computer lifted AI infrastructure and semiconductor sentiment.
- Inflation: July CPI matched market expectations, reducing the perceived odds of a near-term Fed rate hike.
- Implication: Investors appeared to lean toward continued strength in high-growth, rate-sensitive technology and AI-linked supply chains.
What drove the move
AI and chip stocks provided the clearest support for major indices. According to the report, CoreWeave’s shares surged more than 19% after the company delivered guidance for Q3 revenue at the higher end of expectations and raised full-year revenue guidance. The company also pointed to positive developments in orders and backlog.
Super Micro Computer shares rose more than 18% after reporting better-than-expected revenue guidance for Q3, which the market interpreted as a positive indicator for AI data center server demand.
The inflation backdrop reinforced risk appetite. The July U.S. CPI report, released Wednesday, was described as in line with market expectations: headline CPI eased to 3.4% year over year from 3.5% in June, and core CPI declined to 2.5% year over year from 2.6%. On a month-over-month basis, headline CPI rose 0.1% and core CPI rose 0.2%.
While core inflation matched a 5.5-year low noted earlier this year, it remained above the Fed’s 2% target, keeping investors focused on the direction of disinflation rather than declaring victory on inflation.
Market reaction and rates
Rate expectations shifted alongside the CPI release. The article said markets were pricing a 40% chance of a 25 basis point rate hike at the next FOMC meeting, down from 51% on Tuesday. That repricing helped support equities at the open and for much of the session.
Data also showed some initial enthusiasm in Treasury markets that later softened. According to the report, September 10-year T-notes rose 1.5 ticks and the 10-year yield was around 4.688%, after bouncing from an early decline. The article attributed the early move to the CPI-driven improvement in bond demand, while also noting that the Treasury’s 10-year auction produced an auction yield described as the highest since the 2007 financial crisis, which reduced the post-CPI lift.
Beyond U.S. Treasuries, European government yields rose modestly, including a reported increase in the 10-year German bund yield to 3.160% and the 10-year UK gilt yield to 4.970%. The market was also said to be pricing an 89% probability of a 25 basis point ECB rate hike for the ECB’s next policy meeting on September 10.
Earnings momentum and sector impact
Investors also leaned on earnings expectations for the next phase of quarterly reporting. According to Bloomberg Intelligence as cited in the article, the S&P 500 was tracking for roughly 32% earnings growth in the second quarter, versus earlier projections of about 23%, and far above the average outside the COVID period since Q4 2013. The report said AI spending is expected to drive much of that growth, with AI infrastructure names projected to contribute nearly 60% of the S&P 500’s earnings-per-share growth in Q2.
So far, the article noted that 85% of the S&P 500 companies that had reported second-quarter earnings—out of 446—beat estimates, citing Bloomberg data. That combination of guidance strength and beat rates contributed to the market’s comfort with forward earnings momentum.
Chip-related strength spread beyond the biggest AI names. The report said Micron Technology, Lam Research, GlobalFoundries, and Applied Materials all finished up more than 4%, while the iShares Semiconductor ETF advanced 2.3%.
Not all megacap technology performed uniformly. The article said six of the seven “Magnificent Seven” companies closed lower, with Meta falling more than 3% and Microsoft down more than 2%. Nvidia was the standout, up more than 3%, lifted by the broader chip rally tied to AI demand expectations.
Outside tech, H&R Block shares surged more than 16% after positive fiscal Q4 results and stronger-than-expected full-year guidance, underscoring that earnings dispersion still mattered for stock selection even as index-level performance depended heavily on AI and semiconductors.
Bigger picture: what to watch next
With inflation and early earnings outcomes shaping the session, traders are likely to remain sensitive to the next batch of corporate guidance and any follow-up data that changes rate-cut or hike expectations. The report also noted Treasuries will face additional supply, with the Treasury set to sell $35 billion of 30-year bonds on Thursday. For markets, the next FOMC-related developments—along with incoming economic data—and continued AI and semiconductor earnings coverage are likely to determine whether Wednesday’s bid can extend.
