Dow ends lower as S&P 500, Nasdaq gain on AI stocks and softer CPI

US stocks finished mixed on Wednesday as gains in artificial intelligence infrastructure companies and a benign inflation report lifted the S&P 500 and Nasdaq, while the Dow Jones Industrial Average closed little changed.

The S&P 500 rose 0.26% to 7,748.50, and the Nasdaq Composite gained 0.54% to 26,588.49, supported by strong performances across AI-related technology stocks.

The Dow slipped 21 points, or 0.04%, to 53,770.

Markets responded positively after July consumer inflation matched expectations, reinforcing expectations that the Federal Reserve will leave interest rates unchanged at its September policy meeting.

At the same time, investors continued monitoring geopolitical tensions in the Middle East as uncertainty surrounding US-Iran negotiations and attacks on commercial shipping kept energy markets volatile.

Inflation data boosts expectations of Fed pause

Investor sentiment improved after July's Consumer Price Index showed headline inflation rising 0.1% month over month and 3.4% annually, in line with market expectations.

Core inflation, which excludes food and energy prices, increased 0.2% during the month and 2.5% from a year earlier, with both annual readings easing slightly from June.

The inflation figures strengthened expectations that the Federal Reserve will keep its benchmark interest rate unchanged at its September meeting despite lingering concerns over higher energy prices.

According to CME FedWatch data, traders now assign roughly a 60% to 62% probability that the central bank will hold rates steady, compared with an evenly divided outlook before the inflation report.

The market also continued to assess the impact of elevated oil prices, with US crude remaining above $83 per barrel as prospects for reopening the Strait of Hormuz remained uncertain.

Continued shipping disruptions and the lack of progress in US-Iran discussions remained a source of concern for investors despite the encouraging inflation data.

AI infrastructure stocks lead technology gains

Artificial intelligence infrastructure companies were the primary drivers of Wednesday's market gains following another round of strong earnings and optimistic guidance.

CoreWeave surged after reporting second-quarter earnings that exceeded expectations while raising its full-year capital expenditure forecast.

The company's results reinforced investor confidence that spending on AI infrastructure remains robust.

Super Micro Computer also rallied sharply after forecasting fiscal 2027 revenue well above Wall Street expectations, helping fuel broader optimism across the semiconductor and AI hardware sectors.

The positive sentiment spread across the industry, lifting shares of Nvidia, Micron Technology, Dell Technologies and Cisco Systems.

Data center operators also posted gains, with IREN and Applied Digital advancing during the session.

Nebius Group climbed strongly after reporting quarterly results that surpassed analyst estimates, adding further evidence that enterprise demand for AI computing infrastructure remains healthy.

Corporate earnings remain in focus

Beyond AI-related companies, investors continued to react to earnings across several industries.

Restaurant chain Cava Group advanced after reporting stronger-than-expected second-quarter sales and core profit while reaffirming its outlook.

Lumentum Holdings also posted strong gains after beating fourth-quarter expectations and forecasting first-quarter revenue above analyst estimates.