U.S. Stocks Surge on Positive Inflation Data and Tech Sector Resilience

U.S. Stocks Surge on Positive Inflation Data and Tech Sector Resilience

The S&P 500 Index (+0.65%), Dow Jones Industrial Average (+0.13%), and Nasdaq 100 (+1.15%) surged Thursday amid robust inflation data and sustained momentum in the tech sector, with E-mini futures reflecting heightened optimism.

The rally followed the release of the July PPI report, which showed annual inflation cooling to 4.7%—marginally below June’s 5.9% peak but still above the Federal Reserve’s target. Markets adjusted their pricing for September rate hikes, now anticipating a 35% chance of a 25-basis-point increase, down from 40% as rate-sensitive yields retreated alongside gold prices.

Crude oil prices dropped over 2% as tensions in the Persian Gulf eased, driven by a strategic pivot toward economic sanctions over military action against Iran and stagnating negotiations to reopen the Strait of Hormuz. Teheran dismissed U.S. claims of “total control” over the waterway, calling them “nothing more than lies.”

Tech stocks gained broad support, with the iShares Semiconductor ETF (+0.8%) propelled by AI-driven demand. Samsung Electronics (+5.2%) and SK Hynix rallied on South Korea’s market momentum, while U.S.-listed chip stocks like Micron (+4%) and Lam Research (+3%) soared. However, Cisco (-8%) and Cerebras Systems (-12%) underperformed after dismal guidance, contrasted by Strong earnings from 85% of S&P 500 firms reporting Q2 results, including AI infrastructure leaders set to drive 90% of earnings growth.

Global markets diverged: China’s Shanghai Composite (-0.5%) slipped on weak domestic data, while Japan’s Nikkei-225 (+1.16%) and Europe’s Euro Stoxx 50 (+0.18%) edged higher. Tesla (+3%) and Meta (+2%) led megacap gains, while Amazon (-0.8%) lagged amid sectoral caution.

Treasury markets saw mixed price action as the 30-year T-bonds auction drew strong bids at 5.216%, offsetting declines in the 10-year breakeven rate (-0.6 bp to 2.26%). European yields fell steeply, with German bunds (-2.9 bp) and UK gilts (-1.7 bp) reflecting divergent fiscal pressures.

Amid macroeconomic shifts, geopolitical risks, and tech-driven earnings outperformance, investor focus remains anchored on Fed policy cues and AI infrastructure’s upward trajectory in Q3 outlooks.

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