AI Sector Boosts US Stocks as Inflation Data Fuels Fed Rate Hike Odds Slump
The US stock market ended higher on Wednesday after CoreWeave reported strong quarterly results, fueling optimism in the artificial intelligence sector. The company's AI cloud business lifted its annual capital spending forecast and topped earnings estimates, causing its shares to surge 19%.
Other data centre operators also saw gains, with Iren rising nearly 10% and Applied Digital up 4.9%. Nebius Group jumped 34%, beating expectations in its second-quarter results. Super Micro Computer surged 19% after forecasting fiscal 2027 revenue above Wall Street estimates.
Chipmakers also benefited from the AI optimism, with Nvidia climbing 3% and Micron Technology adding 4.9%. The PHLX Semiconductor Index advanced about 2.5%, despite remaining down around 15% from its record high close on June 22.
Mild inflation data released in July further reduced expectations of an interest rate hike from the Federal Reserve next month. The US consumer price index barely increased, with petrol costs declining for a second consecutive month. This reinforced bets that the Fed will hold rates steady in September, as traders now price in a 62% chance of this occurring.