Wall Street Nears Records As Inflation Slows, Oracle Surges/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Wall Street continued its march toward record highs Wednesday after a surprise slowdown in wholesale inflation and a blockbuster AI revenue forecast from Oracle. The S&P 500 rose 0.5%, the Nasdaq climbed 0.5%, while the Dow slipped slightly. Expectations of a Federal Reserve rate cut next week fueled optimism across markets.
Wall Street Rally — Quick Looks
- S&P 500: Up 0.5%, set for second straight record close
- Dow Jones: Down 49 points (-0.1%) in early trading
- Nasdaq: Gained 0.5% after record-setting day Tuesday
- Inflation: Producer prices fell 0.1% in August, boosting Fed cut odds
- Oracle: Stock soared 34.8% on massive AI-driven revenue forecast
- Tech leaders: Nvidia +3.7%, Taiwan Semiconductor +3.1%
- Losers: Synopsys plunged 31.3% after weak profit forecast
- Klarna IPO: Opens at $40 per share, above expectations
- Global markets: Europe mixed, Asia higher; Kospi +1.7%, Hang Seng +1%
- Bonds: 10-year Treasury yield eased to 4.05%
Deep Look: Wall Street Climbs Toward New Records As Oracle Surges And Inflation Slows
NEW YORK — Wall Street inched closer to record territory Wednesday, lifted by a rare combination of cooling inflation and tech-fueled optimism from the artificial intelligence boom.
The S&P 500 gained 0.5%, setting itself up for a second consecutive record high. The Nasdaq composite also advanced 0.5%, continuing its AI-driven rally, while the Dow Jones Industrial Average slipped 0.1% in early trading.
Inflation Report Boosts Market Confidence
Investors cheered news from the Labor Department that U.S. wholesale prices — the producer price index (PPI) — unexpectedly fell 0.1% in August, easing fears that tariffs and supply chain bottlenecks would reignite inflation.
This follows a 0.7% surge in July and suggests inflationary pressures are cooling even as President Donald Trump’s tariffs raise concerns about costs.
Markets are watching closely as the consumer price index (CPI) arrives Thursday. Analysts expect consumer prices to rise 0.3% month-to-month, or 2.9% annually, a slight uptick from July’s 2.7%.
“This report essentially rolled out the red carpet for a Fed rate cut next week,” said Chris Larkin, managing director at E-Trade from Morgan Stanley.
Traders already widely anticipate that the Federal Reserve will cut its benchmark interest rate next week — the first reduction of 2025 — but confirmation depends on continued mild inflation data.
Oracle Leads Tech Surge
The biggest driver of Wednesday’s market enthusiasm was Oracle, which announced a staggering AI-fueled growth forecast.
- CEO Safra Catz revealed Oracle signed four multi-billion-dollar contracts last quarter.
- Cloud infrastructure revenue is expected to jump 77% to $18 billion this fiscal year.
- In just four years, Oracle projects revenue of $144 billion from its cloud business.
Chairman Larry Ellison summed it up: “AI Changes Everything.”
Investors agreed — Oracle’s stock soared 34.8%, potentially its best trading day since 1992.
Tech Stocks Rally
Oracle’s forecast lifted the broader technology sector:
- Nvidia, a leading AI chipmaker, jumped 3.7%.
- Taiwan Semiconductor Manufacturing Co., which makes chips critical for AI development, gained 3.1% after reporting 34% year-over-year revenue growth in August.
- The tech-heavy Nasdaq composite was buoyed by these gains, extending its record run.
Market Losers
Not all tech names benefited:
- Synopsys, a chip-design software firm, fell 31.3% after reporting weaker-than-expected profit and guidance.
This sharp drop underscored that even in an AI-driven rally, earnings misses remain costly.
Klarna IPO Debut
Another headline came from Klarna, the Swedish “buy now, pay later” fintech company, which debuted publicly at $40 per share — about $4 higher than earlier estimates. Its IPO is seen as a bellwether for renewed strength in fintech listings.
Global Markets Mixed
- Asia: Gains led by South Korea’s Kospi (+1.7%) and Hong Kong’s Hang Seng (+1%).
- Europe: Trading was mixed as investors digested U.S. inflation data and awaited ECB policy updates.
Bond Yields Ease
In the bond market, the yield on the 10-year Treasury slipped to 4.05% from 4.08% the day before.
Lower yields reflected optimism that inflation is cooling and that the Fed will deliver rate cuts soon, reducing pressure on borrowing costs across the economy.
Fed’s Balancing Act
The central bank faces a delicate path: cut rates enough to sustain growth without fueling a resurgence of inflation.
Ahmad Assiri, research strategist at Pepperstone, said:
“The broader narrative is increasingly anchored on expectations that the Fed will deliver a rate cut at next week’s meeting.”
Markets will watch Thursday’s CPI report closely, but Wednesday’s data provided another signal that the soft landing scenario — cooling inflation without tipping into recession — may still be in play.
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