It was CoreWeave’s performance that did much to rekindle the market’s favourite growth trade and send the index higher. And with July’s inflation figures coming in mild, traders have been bolstered in their view that the Federal Reserve will leave rates where they are next month.
AI build-out revives risk appetite
One could say the day was for AI infrastructure. CoreWeave put up 19% once it became clear the company had topped second-quarter estimates and hiked its annual capital spending forecast, a move that underlined the intensity of compute demand.
The effect was felt right away across the board. IREN and Applied Digital were two data center operators to advance, while Nebius Group leapt 34% on results that beat what was expected. Super Micro Computer, the AI server specialist, also saw a 19% surge after putting forward a fiscal 2027 revenue outlook that Wall Street had not been anticipating.
Semiconductors drew in investors looking to rotate back in. Nvidia was up 3%, Micron Technology 4.9%, and the PHLX Semiconductor Index made headway of some 2.5%. It is still about 15% off the record it set on June 22, however.
Rates backdrop steadies as inflation cools
Consumer prices in the US were little changed in July, with gasoline costs retreating for a second month in a row and underlying inflation proving benign. All of which has taken the wind out of any near-term rate hike expectations from the Fed.
CME’s FedWatch Tool puts the odds of the Fed holding course in September at 62%. Prior to the July numbers, the market was divided on whether to bet on a hike or no change.
“You are seeing a market thinking that the Fed is not being pushed toward a rate hike,” says Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “The numbers came in right in line. The reaction is slightly positive because there was fear it was going to be worse.”
Index moves, sectors, and sentiment
The S&P 500 finished the session at 7,748.50 points, a 0.26% increase; it is up roughly 13% in 2026 to date. The Nasdaq was 0.54% better at 26,588.49, but the Dow Jones Industrial Average gave back 0.04% to close at 53,770.27.
Real estate led the way with an 1.08% rise, followed by information technology at 1.06%, making eight of the 11 S&P 500 sector indexes green. On the Cboe Volatility Index, Wall Street’s fear gauge slipped 0.8 point to 14.45, the lowest we have seen since January.
Liquidity and breadth were present if measured. Advancers outnumbered decliners 1.7 to one in the US stock market. Volume was 15.5 billion shares, not quite matching the 17.5 billion average of the last 20 sessions.
The day’s biggest movers
These were the stocks that turned heads and drove momentum:
– A 19% jump for CoreWeave on the back of higher capital spending
– Nebius Group up 34% with strong results
– 19% for Super Micro Computer given the long-term outlook
– 3% for Nvidia as the chip sector rallied
– 4.9% added by Micron Technology in step with peers
– IREN nearly 10% in the data center space
– 4.9% for Applied Digital in sympathy
– 14.2% for Cava Group on the beats
– 13.6% for Lumentum Holdings on its outlook
Why this rally matters now
With the macro environment softening, AI infrastructure is once again taking the lead. There is power in that combination: you have the earnings clarity of high-growth enablers and a Fed that is viewed as steady. It was enough to put risk appetite on the upswing even as the Dow took a small hit.
Healthier participation was evident in the internals. The S&P 500 had 19 new highs to just 2 lows; the Nasdaq had 123 new highs against 95 lows. And with real estate climbing 1.08%, the ebb in rate fears is not confined to the tech winners.
What could shift the narrative next
There are two things to watch. Will the AI infrastructure companies hold the line on their elevated capital plans for the rest of the year? And can the benign inflation trend persist so that the 62% chance of a September hold becomes a certainty?
Then there is the matter of global risk. Tensions between the U.S. and Iran are far from resolved; a senior source in Iran has said no headway has been made on the interim deal from June, and shipping attacks go on.
The market’s position is plain: give it expanding AI capex and cooler inflation and the enablers will be rewarded. Whether that kind of alignment endures to fuel the next leg up is the question.
