Stock market today: S&P 500, Nasdaq rise as Oracle surges, PPI inflation bolsters Fed rate cut hopes

US equities broadly advanced on Wednesday, with the S&P 500 and Nasdaq Composite reaching new highs, as Oracle's blowout AI-driven cloud revenue forecast and increased capital expenditure plans sparked renewed optimism for AI infrastructure growth, significantly boosting its stock and chipmakers like Nvidia. This positive sentiment was further amplified by an unexpected decline in August's wholesale inflation, bolstering conviction for a Federal Reserve rate cut as early as September. While Apple shares dipped on lukewarm iPhone reception and Potbelly surged on acquisition news, the market's primary drivers were AI momentum and easing inflationary pressures signaling potential monetary policy loosening.

Analysis

The market experienced a bifurcated rally, with technology shares, particularly those tied to artificial intelligence, significantly outperforming. Oracle's (ORCL) stunning forward guidance served as the primary catalyst, with the company forecasting its Cloud Infrastructure revenue to grow from $18 billion to $144 billion by 2030 and increasing its fiscal 2026 capital expenditure plan to $35 billion. This projection, made despite a quarterly earnings miss, propelled ORCL shares up over 40% and created a strong halo effect for its suppliers, boosting Nvidia (NVDA) by nearly 4% and Broadcom (AVGO) by over 9%. This AI-driven optimism was amplified by macroeconomic data, as the Producer Price Index (PPI) unexpectedly declined by 0.1% month-over-month against expectations of a 0.3% increase. The cooler inflation reading solidified market conviction for a Federal Reserve rate cut in September, with traders increasing bets on a potential 50-basis-point reduction. However, the gains were not universal; the tech-heavy Nasdaq rose just 0.2% while the Dow fell 0.5%, and several individual companies faced headwinds. Apple (AAPL) stock fell over 3% following a lukewarm reception to its new iPhone lineup, extending its year-to-date underperformance. Similarly, Chewy (CHWY) shares dropped 9% after reporting a significant year-over-year profit decline from $0.68 to $0.14 per share, even as it met estimates and grew revenue by 8.6%.

Key Decisions for Investors

• Re-evaluate exposure to the AI infrastructure theme, as Oracle's aggressive revenue and capex forecasts signal a significant acceleration in enterprise spending, which directly benefits semiconductor and cloud hardware providers.
• Given that cooling wholesale inflation is firming up expectations for a September Fed rate cut, investors should consider the positive implications for rate-sensitive growth equities, while closely monitoring the upcoming CPI report as a key confirmation point.
• Exercise selectivity within the technology sector, as the market is clearly differentiating between enterprise AI winners like Oracle and consumer-facing companies like Apple, whose recent product cycle failed to generate significant investor enthusiasm.
• Note the significant alpha generated by M&A activity, such as Potbelly's (PBPB) 31% surge upon its acquisition announcement, suggesting that event-driven opportunities remain a valid strategy in a market dominated by macro themes.