Dow rises as CPI meets estimates, AI earnings lift US stocks higher

US stock indexes opened higher on Wednesday after a largely in-line inflation report reinforced expectations that the Federal Reserve could leave interest rates unchanged next month, while strong earnings and upbeat guidance from artificial intelligence infrastructure companies boosted technology shares.

The Dow Jones Industrial Average gained 68 points while the S&P 500 climbed 0.35%. The Nasdaq Composite gained 0.59%.

The indices surged after the Labor Department reported that the consumer price index rose 3.4% year over year in July, matching economists' expectations.

On a monthly basis, consumer prices increased 0.1%, also in line with forecasts.

The inflation data shifted market expectations for monetary policy, with traders increasing bets that the Federal Reserve will keep interest rates unchanged at its September meeting.

According to the CME FedWatch Tool, markets were pricing in roughly a 55% to 58% probability of no rate change following the report, compared with more evenly divided expectations before the data release.

Inflation data supports Fed pause expectations

The latest inflation reading suggested that price pressures continue to moderate, even as energy markets remain volatile because of geopolitical tensions in the Middle East.

Investors have been closely monitoring inflation after higher oil prices in recent weeks raised concerns that renewed energy-driven price pressures could prompt the Federal Reserve to tighten monetary policy further.

However, the July CPI report largely met expectations, easing immediate concerns over an inflation surprise.

Despite the encouraging inflation data, geopolitical risks remained elevated.

Oil prices traded above $83 per barrel as uncertainty surrounding the conflict in the Middle East persisted, with separate attacks on shipping reported by the United States and Yemen's Iran-aligned Houthis.

Investors continue to assess how developments in the region could influence inflation and future interest-rate decisions.

AI infrastructure earnings drive technology stocks

Technology shares also supported broader market sentiment after several AI infrastructure companies reported stronger-than-expected results and optimistic outlooks.

CoreWeave surged 20% after beating second-quarter earnings expectations and raising its annual capital expenditure forecast.

The AI cloud infrastructure company also reported revenue that more than doubled from a year earlier, underscoring continued demand for AI computing capacity.

Super Micro Computer also advanced 15% after forecasting fiscal 2027 revenue above Wall Street estimates, signaling continued strength in demand for AI servers.

The positive results lifted other companies tied to AI infrastructure.

Data center operators IREN and Applied Digital gained more than 5%, while Nebius Group posted double-digit gains.

Nvidia also moved higher, reflecting continued investor interest in AI-related stocks.

Other semiconductor and infrastructure names participated in the rally, with Dell Technologies, Micron Technology and Cisco Systems also trading higher.

Corporate earnings continue to support markets

The latest batch of earnings reinforced the view that corporate America continues to benefit from robust technology spending despite macroeconomic uncertainty.

Strong results from AI infrastructure companies added to a broader earnings season that has helped push both the S&P 500 and the Dow Jones Industrial Average to record highs in recent sessions.

Outside the technology sector, restaurant chain Cava Group surged after reporting second-quarter sales and core profit that exceeded Wall Street expectations.