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US stocks climbed on Wednesday amid increasing expectations that the Federal Reserve will cut interest rates at its next meeting, following the latest inflation data.
The Dow Jones Industrial Average (^DJI) led the major gauges, rising nearly 0.8%. The benchmark S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) pared earlier gains. The S&P 500 rose 0.1%, while the Nasdaq hovered around the flat line.
The gains followed a big upswing in stocks on Tuesday after the release of the July Consumer Price Index (CPI) report, with the S&P 500 and Nasdaq both touching new records. Though the data showed inflation had ticked up, it increased less than expected.
Treasury Secretary Scott Bessent also on Wednesday called on the Fed to lower rates by 150 to 175 basis points.
“I think we could go into a series of rate cuts here, starting with a 50 basis point rate cut in September,” he told Bloomberg.
The results boosted bets the Fed would cut interest rates at its September policy meeting, especially in light of recent warning signs the labor market is weakening. On Wednesday morning, traders had priced in a nearly 100% chance of a September cut, according to the CME Group.
Later this week, investors will get two more snapshots on the state of the economy with the release of the Producer Price Index on Thursday and retail sales data on Friday.
In corporate news, Circle (CRCL) fell on Wednesday after the company announced it would sell 10 million shares on the heels of its first earnings report since its explosive public debut. Cava (CAVA) shares also dove after the company issued its first annual sales growth target cut. CoreWeave (CRWV) stock plummeted as the company’s operating income guidance fell below expectations and as its cost of debt mounts, despite beating revenue estimates on strong demand for AI.
Looking ahead, Cisco (CSCO) is Wednesday’s earnings headliner after the closing bell.
LIVE 15 updates
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Ethereum surges to near record as investors bet on ‘biggest macro trade’ of the next decade
Yahoo Finance’s Ines Ferré reports:
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Trump’s search to replace Fed Chair Powell continues as new report says up to 11 names under consideration
The Trump administration is broadening its search for the next Federal Reserve chair, with reports suggesting as many as 11 candidates may be in the running to replace Jerome Powell when his term expires in May, Yahoo Finance’s Jennifer Schonberger reports.
Schonberger writes:
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CoreWeave stock plummets as AI cloud company reports ‘deteriorating’ operating income outlook
CoreWeave (CRWV) stock plummeted 18% Wednesday after the AI data center company reported a disappointing quarterly outlook for its operating income.
The company said the previous day that it expects its third quarter operating income to fall between $160 million and $190 million, below the $192 million expected by Wall Street analysts tracked by Bloomberg. At the same time, the company expects interest expense of $350 million to $390 million during that period.
DA Davidson analyst Gil Luria told Yahoo Finance in an email Wednesday that “deteriorating operating income guidance highlights the main issue for CoreWeave – their interest expense is higher than their operating income which means they aren’t generating enough profit to pay their debt holders.”
CoreWeave is one of the largest holders of Nvidia’s (NVDA) AI chips and rents its data center capacity to Big Tech firms such as Microsoft (MSFT), Meta (META), and Google (GOOG) as they scramble to power their AI ambitions. CoreWeave stock’s performance is closely watched as a metric of AI demand.
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Instacart, Kroger stocks under pressure after Amazon launches same-day grocery delivery
Grocery stocks are under pressure, including Instacart (CART), Kroger (KR), Albertsons (ACI), and Sprouts Farmers Market (SFM), after Amazon (AMZN) announced same-day delivery for groceries.
On Wednesday, the e-commerce giant said it would start offering same-day perishable grocery delivery in over 1,000 cities. Amazon plans to reach over 2,300 areas across the US by the end of 2025.
The service is available for Prime members for free, only on orders over $25. It will cost $12.99 without the membership.
In comparison, Instacart has additional service fees but a lower threshold of $10 or more per delivery order.
Amazon stock is roughly flat, compared to the nearly 11% decline in Instacart shares and roughly 4% decline for Kroger, Albertsons, and Sprouts.
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Crypto exchange Bullish prices IPO at $37 per share, valuing company at $5 billion
Cryptocurrency exchange operator Bullish (BLSH) is set to go public on Wednesday at a valuation north of $5 billion as the IPO market looks set to continue a strong summer.
Yahoo Finance’s Jake Conley reports:
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Stocks rise at the open
US stocks moved higher on Wednesday after the open as expectations for Fed interest rate cuts rose.
The tech-heavy Nasdaq Composite (^IXIC) and the Dow Jones Industrial Average (^DJI) rose more than 0.5%, while the benchmark S&P 500 (^GSPC) gained 0.4%.
Within the S&P 500, the Consumer Discretionary Sector (XLY) was up 0.7%, while the Technology Sector (XLK) climbed more than 0.6%.
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Treasury yields fall after Bessent urges Fed to lower rates
US Treasury yields fell on Wednesday as traders increased bets that the Federal Reserve would cut interest rates at its September meeting following a rise in core inflation.
At the same time, Treasury Secretary Scott Bessent urged the Fed to cut interest rates by 150 basis points in an interview with Bloomberg on Wednesday, maintaining political pressure on the central bank.
The 10-year Treasury yield (^TNX) fell 4 basis points to 4.25%, and the 30-year yield (^TYX) dropped to 4.84%.
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Tencent earnings, trade truce lift China tech stocks
As my colleague Jenny McCall notes below, strong domestic liquidity in China and positive sentiment from the US trade truce have boosted Chinese stocks in recent months.
On Wednesday, that rally continued in top Chinese stocks, as recent inflation data boosted hopes for US interest rate cuts and tech companies gained greater clarity around the sale of Nvidia and AMD chips in China.
Tencent (0700.HK) gained 4.7% after the WeChat parent company reported revenue growth of 15%, above estimates. The company is also accelerating AI research to keep up with the competition, which includes Alibaba (BABA), ByteDance, and US companies OpenAI and Anthropic.
US-listed shares of e-commerce company Alibaba rose 3.6%, while JD.com (JD) added 2%. Baidu (BIDU) climbed 2.5%, and PDD Holdings (PDD) rose 1.9%.
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VIX fear gauge sinks to lowest level since December
The VIX (^VIX) volatility index, a key fear gauge in markets, slipped to 14.49 on Wednesday morning, hitting its lowest level since late December 2024.
Despite geopolitical tensions and lingering tariff uncertainty, there are a few reasons why markets are pricing in fewer swings.
For one, investors are holding a lot of cash and buying assets at lower prices during sell-offs, according to Bloomberg. Second, the global economy appears to be holding up better than investors expected after President Trump unleashed “Liberation Day” tariffs in April. At that time, the VIX spiked to 52.
Bloomberg reports:
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Good morning. Here’s what’s happening today.
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Bitcoin isn’t the reason for crypto’s breakout summer
The crypto world has had room to run this year amid a series of legislative wins and new financial initiatives. But notably, the big news items don’t really involve bitcoin (BTC-USD), Yahoo Finance’s Hamza Shaban notes in today’s Morning Brief.
Hamza writes:
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Japan’s Nikkei hits all-time high
The Nikkei 225, the primary index for the Tokyo Stock Exchange, is trading at all-time highs amid optimism that confusion over the recent US-Japan trade agreement is being addressed in addition to the renewed strength in Big Tech.
Domestically, Japan’s key auto industry is cautiously optimistic that the the positive will outweigh any drag coming from tariffs.
“The Nikkei was not able to hit a record until today because chip-related shares and auto shares dragged on the index,” Takamasa Ikeda, senior portfolio manager at GCI Asset Management, told Reuters.
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China’s $11 trillion stock market stages steady resurgence
Chinese stocks have risen in recent months, helped by strong domestic liquidity and despite a lack of major catalysts.
Bloomberg News reports:
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The best points I have heard this morning on CoreWeave
CoreWeave (CRWV) was teed up to let down investors last night.
And it did on several fronts.
First, the company’s net loss was much higher than consensus.
Second, capital expenditures were a whopping $1 billion higher sequentially. And third, capex may climb another $500 million in the current quarter.
While I appreciate the company’s revenue backlog of $30.1 billion doubled year over year, the company’s mixed results and high debt load are real causes for concern. Hence, the sharp pre-market pullback.
Here are two important call outs this morning from DA Davidson analyst Gil Luria:
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Cava crashing
Cava (CAVA) is getting run over premarket to the tune of 23%.
Bottom line on this one: When you are valued as a high-growth stock and you don’t deliver high growth, your stock will take a beating.
Same restaurant sales only rose 2.1%.
The company slashed its full-year same-restaurant sales guidance.
The earnings call wasn’t exactly alarming — the company appears to still be structurally sound.
But a slower economy and increased competition is weighing on the brand’s results. We heard the same exact tone at Chipotle (CMG) and Starbucks (SBUX) this earnings season.
The positive here: Cava is testing salmon for its menu. Who doesn’t like salmon in a $15+ salad bowl?!
