US: Chip stocks rise as stocks rebound to finish higher

WALL Street stocks finished higher on Wednesday, reversing early losses following an inflation report expected to keep the Federal Reserve on track to cut interest rates next week.

Semiconductor companies – which have been under pressure in recent weeks – led Wednesday’s gains, with artificial intelligence star Nvidia rising eight per cent and Micron and Intel also notching big gains.

The tech-rich Nasdaq Composite Index led major indices, rising 2.2 per cent to 17,395.53.

The Dow Jones Industrial Average gained 0.3 per cent to 40,861.71 while the broad-based S&P 500 advanced 1.1 per cent to 5,554.13.

The consumer price index rose 2.5 per cent in August from a year ago, down from a 2.9 per cent increase in July. It was the lowest annual figure since February 2021.

However, a measure of inflation that strips out volatile food and energy costs rose by a larger-than-expected 0.3 per cent from a month earlier.

While investors widely expect the Federal Reserve to cut interest rates later this month, markets have been unsure of how big the cut will be.

Following Wednesday’s inflation data, futures markets showed a jump in expectations for a smaller 0.25 per cent cut instead of a half-point cut.

As the day progressed, investors realized the initial sell-off was an overreaction to the CPI data and that a Fed rate cut will still be positive, said Art Hogan, chief market strategist at B. Riley Wealth

Among individual companies, Trump Media & Technology Group tumbled 10.5 per cent following a presidential debate in which some observers pegged Vice-President Kamala Harris the winner over former president Donald Trump. AFP