US stocks advanced towards record territory on Wednesday as softer inflation data eased fears of another Federal Reserve interest-rate increase and strong results from artificial intelligence infrastructure companies restored confidence in the technology trade.The S&P 500 gained 0.26% to close at 7,748.58, while the technology-heavy Nasdaq Composite rose 0.55% to 26,588.49. The Dow Jones Industrial Average slipped 0.06% to 53,761.57, leaving the broader market rally concentrated in technology and other growth shares.
Investors took encouragement from July consumer-price data showing inflation increasing only 0.1% from the previous month after falling 0.4% in June. Annual inflation eased to 3.4% from 3.5%, while core inflation, excluding food and energy, stood at 2.5% over the 12 months through July.
The reading reduced concerns that stubborn price pressures would force the Federal Reserve to tighten policy again at its September meeting. Futures markets lowered the implied probability of a September rate increase to about 40%, compared with more than 50% roughly a week earlier.
The Federal Reserve left its benchmark federal funds rate unchanged at 3.5% to 3.75% at its July meeting. Policymakers are balancing inflation that remains above their longer-term objective against signs of cooling employment growth, leaving incoming economic data central to the September decision.
Technology shares provided the strongest momentum as investors returned to companies positioned to benefit from continued spending on artificial intelligence computing capacity. The Philadelphia Semiconductor Index rose about 3%, while Nvidia gained around 3% and Micron Technology also advanced.
CoreWeave jumped more than 19% after the AI cloud-computing provider reported second-quarter revenue of $2.58 billion, more than double the level a year earlier, and increased its expectations for full-year revenue, operating profit and investment.
The company raised its 2026 capital expenditure forecast to between $35 billion and $39 billion as it expands data centres and computing capacity built largely around Nvidia processors. Its revenue backlog reached $104.2 billion during the second quarter, providing investors with evidence that demand for specialised AI infrastructure remains substantial despite concerns over the cost of the industry's expansion.
Super Micro Computer climbed about 19% after issuing a fiscal 2027 revenue forecast well above market expectations. The server manufacturer expects annual sales of between $65 billion and $72 billion, compared with market expectations around the low-$50 billion range, as customers increase spending on systems designed for artificial intelligence workloads.
Other companies tied to the data-centre buildout joined the rally. Nebius Group surged more than 30%, while IREN, Applied Digital and Dell Technologies gained as investors interpreted the earnings reports as evidence that infrastructure spending by technology groups and cloud providers remains resilient.
The results helped counter doubts that had emerged over whether the huge capital commitments associated with AI could generate sufficient returns. Major technology companies are collectively expected to spend more than $700 billion this year on capital investment, with data centres, processors, networking equipment and power infrastructure taking an expanding share.
That scale of investment has created a divide in the market. Supporters of the AI trade point to rapid revenue growth among cloud, semiconductor and infrastructure suppliers, while sceptics argue that valuations increasingly depend on sustained spending and future monetisation that may take years to materialise.
The latest earnings strengthened the first argument, at least temporarily, by showing that demand for computing capacity remains ahead of available supply in parts of the market. CoreWeave has said constrained infrastructure availability is allowing it to secure favourable terms on new contracts, while Super Micro's guidance indicates continued large-scale orders for specialised servers.
Broader corporate earnings also supported sentiment. Mediterranean restaurant chain Cava Group rose sharply after quarterly sales and operating results exceeded expectations, while optical-networking company Lumentum Holdings gained following stronger forecasts.
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