NextFin news, Wall Street surged to record highs on Wednesday in New York, driven by cooler-than-expected inflation data and optimism around artificial intelligence (AI) advancements. The S&P 500 closed at a record 6,532.04 points, the Nasdaq Composite also reached a new high at 21,886.06 points, while the Dow Jones Industrial Average declined slightly to 45,490.92 points.
The rally was sparked by the U.S. Bureau of Labor Statistics reporting a 0.1% decline in the Producer Price Index (PPI) for August, defying forecasts of a 0.3% increase. This unexpected drop in wholesale inflation raised hopes among investors that the Federal Reserve might cut interest rates at its upcoming September 17–18 meeting, potentially by as much as 50 basis points.
Technology stocks led the gains, with Oracle soaring 36% in its biggest one-day percentage increase since 1992. Oracle's surge was attributed to a surge in demand for its cloud services from AI companies, pushing its market value to approximately $922 billion, surpassing companies like Eli Lilly, JPMorgan Chase, and Walmart, and nearing Tesla's $1.12 trillion valuation.
Other AI-related chip stocks also rallied, including Nvidia, which rose 3.8%, Broadcom up 10%, and Advanced Micro Devices climbing 2.4%. The PHLX semiconductor index reached a record high, supported further by gains in data center power suppliers such as Constellation Energy, Vistra, and GE Vernova, each rising more than 6%.
Despite the broad market gains, Apple shares declined 3.2%, marking its fourth consecutive session of losses, as investors viewed the company as lagging in the AI race.
Investor focus remains on upcoming U.S. consumer price data, which will provide further insight into inflation trends. Recent labor market data also indicates a slowdown, reinforcing expectations for a Federal Reserve interest rate cut next week. According to CME's FedWatch tool, traders are fully pricing in at least a 25 basis point cut, with a 10% chance of a 50 basis point reduction.
Market breadth was mixed, with six of the 11 S&P 500 sectors declining, led by consumer discretionary and consumer staples. The S&P 500 posted 19 new highs and 8 new lows, while the Nasdaq recorded 112 new highs and 72 new lows. Trading volume was relatively heavy, with 17.2 billion shares exchanged on U.S. exchanges, compared to the 20-session average of 16 billion shares.
These developments occurred amid ongoing geopolitical and economic uncertainties, including a recent federal court ruling temporarily blocking President Donald Trump from removing Federal Reserve Governor Lisa Cook.
Sources: Reuters, AAP News, BBN Times, and U.S. Bureau of Labor Statistics.
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