The S&P 500 Index ($SPX) (SPY) on Wednesday rose +0.26%, the Dow Jones Industrial Average ($DOWI) (DIA) fell -0.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) rose +0.74%. September E-mini S&P futures (ESU26) rose +0.31%, and September E-mini Nasdaq futures (NQU26) rose +0.71%. Stocks closed higher on Wednesday due to strength in AI and chip stocks after CoreWeave and Super Micro reported better-than-expected earnings.
Stocks also received a lift from Wednesday's favorable CPI report, which supported T-note prices and reduced the odds of a rate hike at the next FOMC meeting to 40% from 51% on Tuesday. A $20 Billion Reason Why Intel Stock Is in Focus Marvell Technology (MRVL) Stock Might Offer a Quick Bounce Before Earnings Most Analysts Still Aren't Bullish on Tesla Stock, Even After Recent Selloff. Tired of missing midday reversals?
The FREE Barchart Brief newsletter keeps you in the know. Wednesday's July US CPI report was in line with market expectations. On a year-on-year basis, the July CPI eased to +3.4% y/y from June's +3.5%, and the core CPI eased to +2.5% from June's +2.6%.
On a month-on-month basis, the July CPI rose +0.1% m/m, and the core CPI rose +0.2% m/m. Wednesday's July core CPI report of +2.5% y/y matched the 5.5-year low posted earlier this year but remained above the Fed's 2% inflation target. The nominal CPI remains elevated at +3.4%, well above the 5.5-year low of +2.3% posted last year.
Sep WTI crude oil prices (CLU26) were relatively stable on Wednesday as the markets waited for any sign of progress towards a US-Iran deal to open the Strait of Hormuz. A Pakistan Foreign Ministry spokesperson said the current US-Iran talks continue and that a memorandum of understanding could be extended. A US Navy helicopter fired two missiles at a cargo vessel on Tuesday that the US said was trying to call at an Iranian port, in violation of the US blockade on Iran's ports.
President Trump told reporters late Tuesday that the US has "total control over the Hormuz Strait" and that "we own it." He added, "At some point, maybe they'll do something, and then they get blown away." The outlook for strong Q2 earnings is a bullish factor for stocks. The S&P 500 is tracking for earnings growth of almost 32% in Q2, well above projections of +23%, and nearly four times the average earnings growth rate outside of the Covid period since Q4 of 2013, according to Bloomberg Intelligence. AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2.
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