New York — Wall Street closed higher on Wednesday, driven by a strong performance in the technology sector despite a disappointing inflation report that tempered hopes for a significant Federal Reserve interest rate cut next week.
The Dow Jones Industrial Average rose 124.75 points, or 0.31%, to finish at 40,861.71. The S&P 500 gained 58.61 points, or 1.07%, ending the day at 5,554.13. The Nasdaq Composite led the gains with a rise of 369.65 points, or 2.17%, closing at 17,395.53.
The boost in tech shares was particularly notable, with Nvidia’s stock surging 8% after a Semafor report suggested the U.S. government might permit the company to export advanced chips to Saudi Arabia. The S&P 500 technology index closed up 3.3% on the day.
In contrast, the morning’s inflation data put a damper on market expectations for a major Fed rate cut. The Labor Department reported that the Core Consumer Price Index (CPI), which excludes volatile food and energy costs, increased by 0.3% in August, exceeding economist forecasts of a 0.2% rise. This data shifted market bets, reducing the probability of a 50 basis point rate cut by the Fed from 34% to 15%, while the likelihood of a 25 basis point cut increased to 85%, up from 66% a day earlier.
Political developments also influenced market sentiment. The previous day’s U.S. presidential debate saw Democrat candidate Kamala Harris challenge Republican rival Donald Trump, impacting market views. Stocks linked to Trump’s policies, such as Trump Media & Technology Group, fell sharply by 10.5%, while solar stocks, perceived as benefiting from a potential Harris administration, rallied. First Solar surged 15.2%, Sunrun increased by 11.3%, and SolarEdge Technologies rose by 8.5%.
Sector performance showed six of the S&P 500’s 11 major sectors advancing, with consumer discretionary gaining 1.3%. Conversely, energy and consumer staples sectors lagged, falling 0.93% and 0.88%, respectively. The S&P 500 financial index recovered from earlier losses to close down 0.39%, after being down more than 2% at its session low.
Trading volumes were higher than average, with 12.19 billion shares exchanged on U.S. exchanges, compared to the 20-day moving average of 10.80 billion.
As the market absorbed the inflation data and the political developments, investors adjusted their expectations for Fed policy and sector performance, reflecting the ongoing uncertainty and evolving economic landscape.
