U.S. stocks opened higher on Wednesday after July inflation data matched expectations, prompting traders to reduce bets on another Federal Reserve interest-rate increase in September.
At 09:33 ET, the S&P 500 gained 0.4% to 7,755.78, while the technology-heavy Nasdaq Composite climbed 0.6% to 26,609.59. The Dow Jones Industrial Average added 0.1% to 53,817.96.
U.S. CPI Cools as Expected
Investors focused closely on the July Consumer Price Index for fresh clues about the Federal Reserve’s monetary policy outlook.
The report followed weaker-than-expected U.S. employment data, which had already encouraged traders to reconsider the likelihood of a September rate hike.
According to the U.S. Bureau of Labor Statistics, headline CPI increased 0.1% month over month in July, following a 0.4% decline in June.
Annual inflation slowed to 3.4% from 3.5%.
Core Inflation Also Moderates
Core CPI, which excludes volatile food and energy prices, rose 0.2% month over month after remaining unchanged in June.
On an annual basis, core inflation eased to 2.5% from 2.6%.
All four headline and core inflation readings matched economists’ expectations.
The absence of an upside inflation surprise gave investors greater confidence that the Federal Reserve may not need to tighten monetary policy further in September.
Fed Rate-Hike Expectations Decline
Markets quickly adjusted their expectations following the CPI report.
According to CME FedWatch data cited in the report, the probability of the Federal Reserve holding interest rates unchanged in September increased to nearly 62%, compared with around 54% before the inflation figures were released.
The combination of moderating inflation and weaker employment data could give the Federal Open Market Committee more room to keep borrowing costs steady.
Investors will now turn their attention to the July Producer Price Index, which is scheduled for release on Thursday.
While CPI and PPI are closely monitored, the Federal Reserve primarily uses the Personal Consumption Expenditures price index when assessing inflation. Components of both CPI and PPI contribute to the PCE calculation.
Oil Nears $90 as Hormuz Tensions Persist
Geopolitical developments also remained an important factor for financial markets.
Negotiations aimed at easing the Middle East conflict and reopening the Strait of Hormuz encountered additional obstacles.
Iran reportedly demanded several concessions, including access to frozen assets and reduced U.S. involvement in regional conflicts. Meanwhile, U.S. President Donald Trump called for Iran to provide reparations.
Brent crude briefly approached $90 per barrel as uncertainty surrounding commercial shipping through the strategic waterway continued.
Maritime Attacks Add to Supply Concerns
Fresh attacks on key shipping routes further reduced hopes for a rapid resolution.
Houthi forces reported an attack on commercial shipping in the Bab el-Mandeb Strait, while the U.S. Navy disabled a Panama-flagged vessel near the Gulf of Oman.
The continued instability has kept investors focused on the risk that prolonged shipping disruptions could support higher oil prices and potentially create renewed inflation pressure.
CoreWeave Shares Surge After Record Revenue
Among individual stocks, CoreWeave shares jumped sharply after the AI infrastructure company reported record revenue for a fifth consecutive quarter.
The company’s sales backlog climbed to approximately $104 billion, nearly double the level reported in November.
CoreWeave also said it had secured another $25 billion in net new customer commitments during the current quarter.
CEO Michael Intrator described the period as the strongest bookings quarter in CoreWeave’s history.
AI Demand Continues to Support CoreWeave
CoreWeave purchases advanced artificial intelligence chips from Nvidia and deploys them in data centers, where computing capacity is leased to customers developing and operating AI systems.
The company reported quarterly revenue of $2.58 billion, exceeding Wall Street expectations.
Overall, U.S. stocks started Wednesday on a positive note as investors welcomed stable inflation figures and reduced expectations for another Fed rate increase. However, geopolitical tensions and rising oil prices remain important risks for the broader market outlook.
