Stocks Edge Higher as In-Line CPI Revives AI and Semiconductor Buying

Stocks finished mostly higher on Wednesday, as an in-line inflation report eased concerns about additional Federal Reserve tightening and renewed buying across semiconductor and AI-related stocks provided support. The S&P 500 gained 0.3%, the Nasdaq Composite advanced 0.5%, and the Dow Jones Industrial Average finished flat after the major averages remained confined to relatively narrow trading ranges throughout the session.

The July Consumer Price Index cleared the week’s biggest macroeconomic hurdle without producing a major directional move. Headline CPI increased 0.1% month over month, matching expectations, while core CPI rose 0.2%. The absence of an upside inflation surprise helped reduce concerns that the Fed will need to tighten policy again in September.

According to the CME FedWatch Tool, the implied probability of the FOMC leaving rates unchanged at its September meeting increased to 61.9% from 51.6% on Tuesday. The shift offered some reassurance to investors, although the largely expected inflation figures did little to fundamentally alter the broader market outlook.

With CPI out of the way, attention quickly returned to individual stocks, earnings, and sector-specific catalysts. That shift was particularly evident in information technology, which gained 1.1% and finished among the day’s strongest S&P 500 sectors as enthusiasm returned to semiconductor and AI-related names.

The PHLX Semiconductor Index jumped 2.5%, supported by several powerful post-earnings moves. CoreWeave (CRWV 107.73, +17.41, +19.28%), Super Micro Computer (SMCI 37.55, +5.95, +18.83%), and Lumentum (LITE 932.47, +111.88, +13.63%) all surged, reinforcing investor confidence in the durability of AI infrastructure spending.

Outside the information technology sector, SpaceX (SPCX 146.22, +12.93, +9.70%) was another momentum standout, surging after the introduction of Grok 4.6.

Real estate also gained 1.1%, matching information technology for the day’s strongest sector performance as Treasury yields eased modestly following the CPI release. The combination of softer yields and reduced expectations for near-term Fed tightening provided support to the rate-sensitive group.

Participation elsewhere was considerably more mixed. Strength in semiconductors and AI-related stocks contrasted with weakness across several non-semiconductor mega-cap names, limiting the upside for the broader indices.

Consumer discretionary fell 1.4% and finished at the bottom of the S&P 500 sector standings. Amazon (AMZN 267.28, -4.99, -1.83%) and Tesla (TSLA 327.51, -5.30, -1.59%) both moved lower, while several large apparel companies also came under pressure. Homebuilders and related construction stocks struggled despite the modest decline in Treasury yields, sending the iShares U.S. Home Construction ETF 2.3% lower.

Communication services declined 0.9%, with Meta Platforms (META 578.85, -20.27, -3.38%) ranking among the weakest “Magnificent Seven” components. Charter Communications (CHTR 150.22, -7.47, -4.74%) also posted a sizable decline despite little in the way of company-specific news.

Unlike Monday and Tuesday, geopolitical developments and oil prices played only a minor role in Wednesday’s trading. There were few meaningful developments surrounding the U.S.-Iran conflict, allowing crude prices to remain relatively stable. WTI crude futures settled just $0.09 higher, or 0.1%, at $83.26 per barrel, while the energy sector gained a modest 0.2%.

Overall, Wednesday’s relatively uneventful session reflected a market that received some reassurance from the latest inflation data without seeing a meaningful change in the broader macroeconomic outlook. The increased probability of the Fed remaining on hold in September provided a supportive backdrop, while renewed enthusiasm for semiconductor and AI infrastructure stocks was sufficient to push the S&P 500 and Nasdaq higher.

At the same time, weakness across several mega-cap stocks and uneven participation elsewhere kept the advance contained. With July CPI now behind them, investors can turn their attention back toward corporate fundamentals, AI spending trends, and incoming economic data for clues about whether the market can build on Wednesday’s modest gains.

Our FTInvest 11 model portfolio declined 1.60% to close at 1,052.70, reversing the previous session’s gain and interrupting the recent period of relative stability. The decline pushed the portfolio somewhat further away from its July record, although it remains comfortably above the 1,000 level and approximately 4.0% below its all-time closing high of 1,096.33.

FTInvest 11 is now up approximately +13.41% year-to-date, maintaining a strong double-digit return for 2026 despite today’s setback. The latest decline illustrates that short-term volatility remains present following the portfolio’s powerful summer recovery. Nevertheless, FTInvest 11 continues to preserve a substantial portion of its 2026 gains while remaining focused on its disciplined, value-driven investment strategy and long-term capital appreciation.