AI Cloud Frenzy and Cooling Inflation Drive S&P 500 and Nasdaq to Fresh Highs

Oracle’s historic rally and Fed rate-cut optimism ignite record-breaking moves on Wall Street

The S&P 500 and Nasdaq Composite climbed to new record highs Wednesday, powered by a historic surge in Oracle shares and renewed confidence that the Federal Reserve may cut interest rates in the coming weeks. Softer-than-expected inflation data added fuel to investor sentiment, reinforcing bets that monetary policy is set to ease.

Oracle Powers the Rally

Oracle’s stock soared 35%–40%, its biggest single-day gain since 1992, after the company revealed a massive AI-driven cloud backlog that could top $500 billion. The announcement signaled surging demand for Oracle Cloud Infrastructure, underscoring how artificial intelligence is reshaping enterprise computing and fueling investor enthusiasm.

The move lifted other tech and infrastructure names:

• NVIDIA, AMD, and Broadcom extended gains on expectations of sustained AI chip demand.
• Energy and utilities tied to data center power demand, including Constellation Energy, Vistra, and GE Vernova, also rallied.

Rate-Cut Bets Strengthen

Markets also cheered new inflation figures. The Producer Price Index (PPI) came in softer than forecast, raising hopes that the Fed could act as soon as this month. Futures markets now price in:

• A 90% probability of a 25-basis-point cut.
• A 10% chance of a deeper 50-basis-point reduction.

With borrowing costs potentially set to fall, equities found an added tailwind. Analysts note the dual momentum from AI investment and monetary policy optimism provided a potent boost for Wall Street.

Index Moves and Market Sentiment

At Wednesday’s open:

• The S&P 500 rose about 0.5%.
• The Nasdaq Composite added roughly 0.4%.
• The Dow Jones Industrial Average lagged slightly, reflecting its smaller tech weighting.

Brokerages responded by raising year-end forecasts, with Barclays setting a new target for the S&P 500 at 6,450.

Financial Market Implications

• Equities: The tech-led rally signals broad investor confidence, though analysts caution valuations could face pressure if rate cuts disappoint.
• Fixed Income: Prospects of easing policy pushed long-term yields lower, offering relief to bond markets.
• Global Flows: Softer U.S. yields may drive renewed flows into emerging markets, while a weaker dollar could ease pressure on global trade partners.
• Volatility Risk: With key CPI data still due, markets remain sensitive to any surprises that could shift Fed expectations.

Outlook

Wall Street’s record-setting session underscores a powerful narrative: AI cloud demand is transforming corporate earnings prospects, while cooling inflation is reshaping policy outlooks. Together, these forces have pushed the S&P 500 and Nasdaq into uncharted highs, and set the stage for further volatility as investors parse every data point for signs of the Fed’s next move.