Nasdaq, S&P 500 Edge Higher on Cooling Inflation Data; Dow Trades Flat as Fed Rate Decision Looms

Mumbai, Aug 12: The Nasdaq Composite advanced on Wednesday as investors assessed July inflation data that showed price pressures easing slightly, reinforcing expectations that the Federal Reserve may hold interest rates steady at its September meeting. The technology-heavy index rose 141.49 points, or 0.54%, to 26,586.93, while the S&P 500 climbed 18.78 points, or 0.24%, to 7,746.98. The Dow Jones Industrial Average traded marginally lower, slipping 15.63 points, or 0.03%, to 53,776.22 during the opening session, as markets digested a mixed bag of economic signals and corporate earnings. 

July CPI Matches Estimates at 3.4% as Core Inflation Cools to 2.5% 

The Consumer Price Index for July rose 0.1% on a monthly basis, bringing the annual inflation rate to 3.4%, precisely in line with Dow Jones consensus estimates. Core CPI, which strips out volatile food and energy prices, increased 0.2% month-over-month, with the yearly reading coming in at 2.5%. Both headline and core annual rates marked a slight deceleration from June’s 3.5% and 2.6% readings respectively. 

The inflation data arrives at a critical juncture for the Federal Open Market Committee, which remains divided on the appropriate policy path following three dissenting votes at the previous meeting favouring a rate increase. Energy prices exerted upward pressure throughout July after a ceasefire between the United States and Iran collapsed, yet average pump prices remained slightly below June levels, according to US Energy Information Administration data. Services inflation continues to present a sticky challenge, though this sector demonstrates limited sensitivity to interest rate adjustments, potentially strengthening the case for maintaining current policy settings. 

AI Infrastructure Stocks Rally as CoreWeave Surges 18% on Strong Q2 Revenue 

Cloud computing specialist CoreWeave jumped 18.2% in premarket trading after reporting second-quarter revenue that more than doubled year-over-year, driven by accelerating customer demand for artificial intelligence infrastructure. The company also lifted its annual capital spending forecast, signalling confidence in sustained growth. Adjusted operating income margin of 5% exceeded analyst expectations, reinforcing the narrative that AI buildout remains robust despite broader economic uncertainties. 

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Super Micro Computer added 13% following the release of an optimistic first-quarter earnings and revenue forecast that surpassed Wall Street estimates. The data centre infrastructure provider expects adjusted earnings in the range of $1.01 to $1.10 per share, far above the LSEG consensus estimate of 76 cents per share, while revenue guidance of $14.5 billion to $15.5 billion topped the anticipated $11.68 billion. Other AI-related names followed suit, with Dell Technologies advancing 4.5%, Micron Technology climbing 6.3%, and Cisco Systems rising 2.6% ahead of its after-market earnings report. US-listed shares of Dutch neocloud specialist Nebius Group surged more than 16% after reporting better-than-expected EBITDA and revenues. 

Nasdaq 100 Heatmap Shows Mixed Performance as Chip Stocks Outperform 

The Nasdaq 100 heatmap revealed a divergent session, with semiconductor names leading gains while mega-cap technology stocks faced pressure. Micron Technology topped the index with a 6.04% advance, followed by Seagate Technology rising 7.61%, while Lam Research and Applied Materials climbed 4.91% and 4.83% respectively. Intel gained 3.24% after analysts at Bank of America and UBS viewed the company’s $20 billion equity raise as a sign of confidence in its foundry roadmap, despite potential earnings-per-share dilution of approximately 5%. 

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Conversely, Microsoft declined 2.17%, Apple slipped 0.46%, and Meta Platforms fell 1.84% as investors rotated toward value and cyclical names. Palantir Technologies dropped 2.89%, while Adobe and Intuit lost 2.90% and 2.25% respectively. The communication services sector dragged the broader market, with Alphabet shedding 0.55% and AppLovin declining 1.56%, extending recent weakness amid Google’s internal AI division restructuring. 

Dow Jones Lags as Home Depot and IBM Weigh on Blue-Chip Index 

The Dow Jones Industrial Average traded near flat, underperforming its peers as declines in key components offset gains in energy and financial shares. Home Depot dropped 2.82%, IBM fell 2.74%, and Salesforce declined 2.69%, while Boeing shed 1.56% amid ongoing production concerns. On the upside, Caterpillar rallied 2.43%, Nvidia gained 2.52%, and Goldman Sachs advanced 1.54%, providing some support to the price-weighted average. 

The index traded within a narrow range of 53,771.70 to 53,969.36, with volume reaching 68.9 million shares in the early session. The 52-week range stands at 44,571.53 to 54,744.33, suggesting the blue-chip benchmark remains within striking distance of its recent highs despite the day’s muted performance. 

S&P 500 Sector Rotation Favours Industrials and Energy as Tech Lags 

Within the S&P 500, sector performance reflected a rotation away from growth names toward cyclical and defensive areas. Industrials gained 0.6%, led by General Electric Vernova rising 2.59% and Eaton advancing 2.01%, while Energy added 0.4% as crude prices extended gains. Consumer discretionary faced headwinds, with Amazon declining 0.95%, Tesla falling 1.62%, and Home Depot dropping 2.92%. Communication services underperformed, sliding 1.1% as streaming and advertising names came under pressure. 

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The broad-market index opened at 7,765.46, touched a high of 7,766.01 and a low of 7,741.72, with volume reaching 425 million shares in the first hour. The 52-week range of 6,316.91 to 7,793.68 indicates the index is trading near the upper end of its historical band, reflecting the market’s resilience despite geopolitical tensions and policy uncertainty. 

Fed Rate Hike Odds Tilt to 55% Hold After Inflation Report 

Following Wednesday’s CPI release, traders adjusted their expectations for the September Federal Reserve meeting, with fed funds futures pricing in approximately a 55% probability that the central bank will keep its benchmark rate unchanged in the 3.50% to 3.75% range. This marks an increase from the roughly 50-50 split observed before the data and a notable shift from the 45% hold probability seen a week ago. 

Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, noted that in-line inflation reinforces the narrative that there is no pressing need to raise rates, particularly following last week’s softer jobs report. However, she cautioned that another round of inflation data will be released before the September FOMC meeting, leaving room for the storyline to evolve. Higher oil prices, with Brent crude trading near $89 per barrel, continue to complicate the inflation outlook, as do lingering supply chain disruptions linked to the Middle East conflict. 

Oil Prices Rise for Fifth Consecutive Day as Hormuz Tensions Escalate 

Brent crude futures gained 0.4% to $89.26 per barrel, heading for a sixth consecutive daily increase, while US West Texas Intermediate crude rose 0.7% to $83.77 per barrel, marking a fifth straight session of gains. The rally follows attacks on two ships in the Gulf of Oman and the continued deadlock in negotiations between the United States and Iran over reopening the Strait of Hormuz, a critical chokepoint for global oil shipments. 

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The International Energy Agency forecast that world oil demand will drop by 1.6 million barrels per day in 2026, a downward revision of 510,000 barrels per day from its July projection, as high fuel prices weigh on consumption. The IEA noted that demand is expected to pick up through the year and return to growth in the final quarter, but the immediate impact of the strait closure continues to squeeze the global economy. Iranian officials reiterated that the strait will not reopen until their conditions are met, while US forces enforced the blockade by firing on a Panama-flagged ship attempting to cross the Gulf of Oman on Tuesday. 

Gold Rises 1.1% to $4,416 as Dollar Weakens on Rate Hold Bets 

Spot gold advanced 1.1% to $4,416.29 per ounce, climbing above the 100-day moving average of $4,387.33, as a softer US dollar and diminished rate-hike expectations boosted demand for the non-yielding asset. Bullion scaled its highest level since June 5 on Tuesday and continued its upward trajectory following the CPI release. US gold futures gained 0.8% to $4,476.10, reflecting increased safe-haven flows amid geopolitical uncertainty and the prospect of steady monetary policy. 

The dollar weakened against major currencies, with the yen rising 0.21% to 158.93 per dollar, as traders priced in a higher likelihood of Fed inaction in September. Treasury yields remained broadly flat, with the 10-year yield holding at 4.682%, the 2-year yield at 4.212%, and the 30-year bond yield unchanged at 5.231%, suggesting bond markets are awaiting further clarity on the policy path. 

Corporate Earnings Highlights: Intel, Vestas, CodeRabbit Make Headlines 

Intel shares gained 3.2% after analysts at Bank of America and UBS characterised the company’s $20 billion equity raise as a positive signal of confidence in its foundry roadmap, despite near-term dilution concerns. Vivek Arya at Bank of America maintained a buy rating with a target price of $145, while UBS analysts viewed the move as removing an overhang on the stock. 

European wind turbine maker Vestas Wind Systems soared 18% after reporting second-quarter adjusted EBIT of €446 million, more than double the €205 million consensus estimate, on revenues of €4.7 billion, up 26.1% year-over-year. The company raised its full-year EBIT margin guidance to 7-9%, up from 6-8%, while maintaining revenue expectations of €20-22 billion. 

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AI code review platform CodeRabbit raised $143 million in a funding round that valued the startup at $1.5 billion, underscoring sustained investor appetite for AI-enabled developer tools. Goldman Sachs agreed to acquire exchange-traded funds provider Neos Investments for as much as $2.25 billion, as the investment bank seeks to bolster its asset management presence. Neos, which manages $30 billion in assets across 19 funds, specialises in systematic options-based income ETFs. 

Nasdaq Opens 0.89% Higher as Traders Digest CPI and Earnings Boost 

At the opening bell, the Nasdaq Composite surged 235 points, or 0.89%, to 26,680.47, while the S&P 500 opened 0.48% higher at 7,765.46. The Dow Jones Industrial Average added a modest 5.6 points to 53,797.47, reflecting the divergence between growth-oriented and value-oriented indices. 

The market’s positive open followed a session of back-to-back losses on Tuesday, when the S&P 500 fell 0.32% to 7,728.20 and the Nasdaq declined 0.60% to 26,445.45, weighed down by technology stocks and geopolitical uncertainties. The Dow had shed 184 points on Tuesday, closing at 53,791.85, as hopes for a reopening of the Strait of Hormuz faltered and Alphabet shares extended their losing streak. 

Investors will now turn their attention to the Producer Price Index report due Thursday, which could provide additional insights into wholesale inflation trends. Cisco Systems, Coherent Corp., and Cerebras Systems are scheduled to report results after the bell, offering another view of the AI infrastructure trade following bullish outcomes from CoreWeave, Super Micro Computer, and Nebius Group. 

The July CPI data, aligning with expectations, reinforces the case for the Federal Reserve to maintain current rates through September, though energy-driven inflation risks persist. Market participants should monitor upcoming PPI figures and Middle East developments, as these factors could reshape policy expectations. Sector rotation favours industrials and energy over tech in the near term, while gold’s upward trajectory reflects sustained safe-haven demand amid geopolitical turbulence.