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Wall Street stocks closed higher on Wednesday, paring early losses after an inflation report is expected to prompt the U.S. Federal Reserve to cut interest rates next week.
Semiconductor companies, which have been under pressure in recent weeks, led the share price gains on Wednesday. Artificial intelligence star Nvidia rose eight percent, and Micron and Intel also posted big gains.
The technology-heavy Nasdaq Composite Index led the major indices, rising 2.2 percent to 17,395.53.
The Dow Jones Industrial Average rose 0.3 percent to 40,861.71, while the broad-based S&P 500 rose 1.1 percent to 5,554.13.
The consumer price index rose 2.5 percent year-on-year in August, compared with a 2.9 percent increase in July. It was the lowest annual reading since February 2021.
However, the inflation index, which excludes fluctuating food and energy prices, rose by 0.3 percent compared to the previous month, which was more than expected.
While investors generally expect the US Federal Reserve to cut interest rates this month, markets are unsure how big the cut will be.
Following Wednesday’s inflation data, expectations on the futures markets rose that interest rates would be cut by 0.25 percent rather than half a percentage point.
As the day progressed, investors realized that the initial sell-off was an overreaction to the CPI data and that a Fed rate cut would still be positive, said Art Hogan, chief market strategist at B. Riley Wealth
Among individual companies, Trump Media & Technology Group lost 10.5 percent after some observers saw Vice President Kamala Harris defeat former President Donald Trump in a presidential debate.
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