Tech Stocks Propel Markets Amid Inflation Concerns

All major U.S. stock indexes closed higher on Wednesday, driven by gains in the technology sector, despite a disappointing inflation report. The S&P 500 technology index rose 3.3%, led by Nvidia. Investor sentiment was also influenced by political developments from the U.S. presidential debate.

All three major U.S. stock indexes closed higher on Wednesday, buoyed by gains in the technology sector. This uptick countered investor disappointment from an early morning inflation report, which dampened hopes that the Federal Reserve would cut interest rates by 50 basis points next week.

The S&P 500 technology index rose 3.3% after a significant boost from AI chipmaker Nvidia, which added 8%. A Semafor report suggested the U.S. government might allow Nvidia to export advanced chips to Saudi Arabia. Political events also weighed in, with Democrat Kamala Harris putting Republican Donald Trump on the defensive during a U.S. presidential debate.

Earlier, the Labor Department reported a 0.2% rise in the consumer price index (CPI) for the last month, matching July's figure. Core CPI rose 0.3%, slightly above economist expectations. Consequently, traders adjusted their bets, showing an 85% probability of a 25 basis points Fed rate cut next week.

(With inputs from agencies.)