US stocks moved higher Wednesday after July inflation matched forecasts and reduced concern about another Federal Reserve rate increase. Technology shares led the advance as strong AI infrastructure earnings supported demand expectations across the sector.

The NASDAQ Composite gained 0.64% to 26,560 by 11:30 a.m. ET. Meanwhile, the S&P 500 rose 0.33% to 7,753. The Dow added 0.21% to reach 53,900. Investors also bought Treasury bonds as rate-hike expectations eased across major US financial markets.

July CPI Supports September Rate-Hold Bets

The consumer price index increased 0.1% in July and 3.4% from one year earlier. Both figures matched market forecasts. Annual headline inflation eased from 3.5% in June.

Core CPI, which excludes food and energy, rose 0.2% during July. The annual core rate slowed to 2.5%. This pace matched the lowest reading since March 2021.

Traders raised their expectations for the Fed to keep interest rates unchanged in September. CME FedWatch data placed the probability near 55% to 58% after the CPI release. The current federal funds target range stands at 3.50% to 3.75%.

Morgan Stanley Wealth Management strategist Ellen Zentner said, “In-line inflation will keep the ‘no need to hike rates’ narrative” intact. She added that another inflation report will arrive before the September meeting.

AI Earnings Send Technology Shares Higher

Technology stocks supplied most of Wednesday’s market gains. The S&P 500 information technology sector rose 1.2%, while the Philadelphia semiconductor index gained about 3%.

Nvidia shares advanced 2%, Broadcom climbed 1.4%, and Micron Technology gained 4.4%. Dell Technologies and Cisco Systems also traded higher as investors returned to AI-linked companies.

Additionally, CoreWeave jumped about 20% after reporting second-quarter results above market expectations. Revenue doubled from the prior year, while its adjusted operating margin reached 5%. 

The AI cloud provider also raised its annual capital spending forecast. CoreWeave expects 2026 capital expenditure between $35 billion and $39 billion. 

Super Micro Computer also gained as much as 17% after issuing an upbeat fiscal 2027 revenue forecast. Nebius rose about 15.5% after its cloud unit recorded a 514% increase in quarterly sales. IREN and Applied Digital gained 7.8% and 5.5%, respectively.

NASDAQ Approaches Its Record High

The technology-led rally brought the NASDAQ within 2% of its record high. Meanwhile, the S&P 500 and Dow had already reached record levels during the previous week.

Advancing shares outnumbered declining stocks by 1.54 to one on the New York Stock Exchange. NASDAQ advancers led decliners by 1.53 to one. The NASDAQ recorded 46 new 52-week highs and 39 new lows.

Cava Group rose 17.5% after second-quarter sales and core profit beat Wall Street forecasts. Lumentum Holdings gained 6.8% after its quarterly results and first-quarter revenue forecast exceeded analyst estimates.

SpaceX shares advanced about 4% during morning trading and extended their weekly gain to roughly 28%. Daiwa Capital Markets cut its price target to $140 from $175 and kept a neutral rating. Analysts cited the company’s more capital-intensive business model.

Oil and Middle East Risks Limit Relief

Higher energy costs continued to shape the inflation outlook. US crude traded above $83 per barrel earlier Wednesday. Later data placed West Texas Intermediate near $82.61, down 0.7%.

Talks involving Iran produced no progress toward reviving the interim agreement reached in June. Shipping attacks also continued, while uncertainty surrounded the reopening of the Strait of Hormuz.

Treasury prices rose after the inflation report. The two-year yield fell four basis points to 4.17%. The 10-year yield declined three basis points to 4.66% as traders reduced September rate-hike bets.

Bitcoin gained about 0.2% to $63,826, while Ether rose 1% to $1,899. Spot gold climbed 1.4% to $4,429.21. The Bloomberg Dollar Spot Index slipped 0.1% during the session.

Overall, US stocks rose as softer inflation boosted Fed rate-hold hopes, while strong AI earnings lifted tech shares. AI demand remains a key market driver, though oil prices and geopolitical risks pose challenges.

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