Last week, Wall Street experienced record-breaking activity, driven by easing inflation concerns and significant moves in the artificial intelligence sector. The S&P 500 surpassed 7,800 for the first time, closing at a record high, while the Nasdaq also posted gains, marking its third consecutive week of increases. The Dow, however, fell nearly 0.6% for the week.
Key inflation reports showed a modest increase in the consumer price index of 0.1% for July, with the annual inflation rate dropping to 3.4%, aligning with expectations. Additionally, the producer price index remained unchanged, which further alleviated fears of an imminent interest rate hike by the Federal Reserve.
As a result, market expectations for a September rate hike decreased, with a 67% chance now priced in for the Fed to maintain its current benchmark rate. In the AI sector, Intel's announcement of a $20 billion stock sale initially caused a dip in its shares, but was later viewed positively as a sign of management's confidence in AI opportunities.
The stock offering was well-received, with Intel's shares rising approximately 1% by week's end. Meanwhile, Nvidia's partnership with major asset managers to create a $500 billion financing initiative for AI computing further solidified the sector's growth potential.
This initiative aims to position Nvidia's GPUs as long-term revenue-generating assets, countering skepticism about their depreciation. Overall, these developments reflect a growing recognition of the importance of AI infrastructure, with both Intel and Nvidia playing pivotal roles in this evolving market landscape