By The S&P 500 opened at a new record on Wednesday after US wholesale prices unexpectedly declined, fueling expectations that the Federal Reserve will move ahead with an interest rate cut next week.
Gains were led by Oracle, which surged more than 31% on the back of an upbeat forecast tied to artificial intelligence.
Oracle’s sharp rally followed the company’s report that multicloud database revenue grew 1,529% in its latest quarter, driven by AI-related demand.
Shares of Nvidia and AMD also rose as investor interest in artificial intelligence stocks picked up once again.
The S&P 500 advanced 0.4%, while the Nasdaq Composite rose 0.5%, also reaching record levels.
The Dow Jones Industrial Average slipped 67 points, or 0.1%.
Investor sentiment improved following the latest producer price index release, which showed a 0.1% decline in August.
Economists surveyed by Dow Jones had anticipated a 0.3% increase.
Economists expect the CPI to show monthly gains of 0.3% for both the headline and core measures.
Such figures would lift the annual headline inflation rate to 2.9%, while the core reading is projected to remain steady at 3.1%.
These outcomes could reinforce expectations for a rate cut at the Fed’s September meeting.
According to the CME FedWatch tool, traders are fully pricing in at least a quarter-point cut.
Market participants also raised bets on the possibility of a deeper half-point reduction after the PPI release.
PPI boost rate cut hopes
Wholesale prices declined unexpectedly in August, easing pressure on the Federal Reserve ahead of its policy meeting this month, according to data released Wednesday by the Bureau of Labor Statistics.
The producer price index, which tracks input costs across a wide range of goods and services, slipped 0.1% for the month.
That followed a downwardly revised 0.7% increase in July and was below the Dow Jones estimate for a 0.3% rise.
Core PPI, which excludes food and energy, also fell 0.1%, compared with expectations for a 0.3% increase.
The report comes one week before the Federal Open Market Committee announces its decision on interest rates.
Futures market pricing currently signals full expectations that the Fed will implement its first rate cut since December 2024, though policymakers are expected to weigh the PPI release alongside consumer price data due on Thursday.
Wells Fargo analysts expect the Federal Reserve to begin a steady easing cycle, projecting five rate cuts through the middle of 2026.
In a note published Wednesday, the bank said it anticipates the Fed will lower the federal funds rate by 25 basis points at each of its next three policy meetings, which would bring the target range down to 3.50%–3.75% by the end of this year.
Analysts also forecast two additional quarter-point reductions at the March and June meetings in 2026, which would take the terminal rate to 3.00%–3.25%.
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