US stocks closed near all-time highs, led by the technology sector, after a subdued inflation reading helped ease interest-rate hike concerns.
The S&P 500 closed 0.3% higher. The technology-heavy Nasdaq 100 gained 0.7%, reversing losses from earlier in the week. The Cboe Volatility Index, which measures the expected volatility of the S&P 500 over the next 30 days, fell to its lowest level since January, as investors anticipate a stable market for the foreseeable future, buying little insurance against a crash.
As investors look toward a September rate decision, market pricing of a Federal Reserve rate hike swung to around 40%, after sitting at a 50-50 toss-up ahead of the inflation print.
"We reversed some of the rally lower in rates from the morning, but it seems like the market sentiment was similar in that this just shifted the focus onto the next print," said TD Cowen US Rates Strategist Molly Brooks.
Helping lift stocks were results from Coreweave Inc., a bellwether for the data center boom, and Nebius Group NV that affirmed confidence in the AI trade. Shares of Nebius surged 34% while Coreweave gained 19%, recovering from their July lows.
While AI infrastructure-related stocks jump on earnings, attention quickly turns to capacity constraints. "As seen in other AI-related earnings results, scarcity translates into pricing power," said Bloomberg Macro Strategist Michael Ball.
| US CPI data released Wednesday showed July consumer prices rose in line with expectations, while a key metric matched the slowest pace since March 2021. The CPI reading and a cooler-than-expected jobs report "may keep hawkish Fed officials at bay in September," said Gary Schlossberg, global strategist at Wells Fargo Investment Institute. "However, we remain guarded on the near-term outlook for inflation amid volatile oil prices tied to the ongoing Middle East conflict along with lingering core price pressures from a strong economy and the AI boom." PPI data, to be released Thursday, will allow markets to "get a better gauge of how this all passes into core PCE, the Fed's preferred inflation measure," TD Cowen's Brooks said. "Overall, the print is supportive of a Fed hold, but we are not out of the woods on a hike as the Fed does not need much to tip them over the edge towards raising rates." In post-market earnings news, Cisco Systems Inc. and Cerebras Systems Inc. reported earnings that provided an update on the companies' push to capitalize on AI spending and efforts to make AI hardware profitable. ALSO READ: BofA Enters Into JV With Jio Financial, To Buy 49% Stake In Credit Arm Cisco Systems shares slipped 3.7% in post-market trading, even as the world's largest maker of networking equipment gave a sales projection for the current quarter that exceeded Wall Street's expectations. Cerebras Systems shares slumped 15.7% after the AI chipmaker reported a surprising decline in hardware revenue. |
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