US stocks: Nasdaq leads Wall Street higher as AI stocks rally, inflation supports Fed pause

US stock indexes rose on Wednesday, led by the Nasdaq, as upbeat earnings from AI infrastructure companies lifted technology shares. Broadly in-line inflation data also strengthened expectations that the Federal Reserve would leave interest rates unchanged, Reuters reported.

US consumer prices rose slightly in July, weakening the case for a rate increase next month. Traders now see a 55% chance that the Fed will hold rates steady in September, according to the CME FedWatch Tool, up from roughly even odds before the data.

“These backwards-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,” Luke Rahbari, CEO of Equity Armor Investments, told Reuters.


“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,” he added.

Inflation and other economic data have faced heightened scrutiny as rising energy prices linked to the Middle East conflict have increased expectations of a rate hike, while Fed Chair Kevin Warsh has continued to offer limited forward guidance.

The situation in the Middle East remained volatile. A senior Iranian source said there had been no progress in efforts to revive the interim agreement reached in June or establish a timeline for its implementation, while attacks on shipping persisted.

At 9:38 a.m. ET, the Dow Jones Industrial Average was up 110.53 points, or 0.21%, at 53,902.38. The S&P 500 rose 25.54 points, or 0.33%, to 7,753.74, while the Nasdaq Composite advanced 168.73 points, or 0.64%, to 26,614.17.

The S&P 500 information technology sector climbed 1.2%, led by chipmakers. Nvidia rose 2%, Micron Technology gained 4.4% and Broadcom added 1.4%.

The broader semiconductor index advanced about 3%, putting it on course for its biggest one-day gain in more than a week.

CoreWeave soared 20% after the AI cloud company beat second-quarter earnings estimates and raised its annual capital spending forecast.

Other AI infrastructure stocks also advanced. Data-centre operators IREN and Applied Digital rose 7.8% and 5.5%, respectively, while neocloud company Nebius Group surged 15.5% following its second-quarter results.

Super Micro Computer led gains on the S&P 500, jumping 17% after the AI-server maker forecast fiscal 2027 revenue above Wall Street expectations.

The results highlighted strong AI-related demand as Wall Street giants continued to invest billions in expanding their AI infrastructure.

The Nasdaq moved within 2% of its record high, while the S&P 500 and Dow had reached fresh peaks the previous week on strong earnings.

Cava Group surged 17.5% after beating quarterly sales and core profit estimates, while Lumentum Holdings rose 6.8% on upbeat results and guidance.

Advancing stocks outnumbered decliners by about 1.5 to 1 on both the NYSE and Nasdaq. The S&P 500 recorded eight new 52-week highs and one new low, while the Nasdaq posted 46 new highs and 39 new lows.