US stock market ended mixed on Wednesday, with the benchmark indices S&P 500 and Nasdaq posting record high closing levels, buoyed by increased hopes of a Federal Reserve interest rate cut.
The Nasdaq rose 0.03% to 21,886.06 for its third consecutive record-high close. The S&P 500 gained 0.30% to end the session at 6,532.04, closing with a record high for the second straight day. However, the Dow Jones Industrial Average declined 0.48% to end at 45,490.92.
The has rallied about 11%, while the Nasdaq has surged about 13% in 2025.
Here are five key reasons behind the S&P 500 and Nasdaq hitting record high:
Fed Rate Cut Hopes
The rally in the US stock market comes amid rising expectations of at least 25 basis points (bps) interest rate cut by the US Fed at its upcoming meeting. The Federal Open Market Committee (FOMC) will announce its monetary policy and interest rate decision on September 17.
Traders fully expect the Fed to cut interest rates by at least 25 bps at its policy meeting next week, with a 10% chance the central bank could cut by 50 basis points, CME’s FedWatch tool showed.
US Inflation Cools
A surprise fall in US producer prices further boosted hopes on Fed rate cut. US Producer Price Index (PPI) for final demand dipped 0.1% in August after a downwardly revised 0.7% jump in July. Economists polled by Reuters had forecast the PPI would advance 0.3% after a previously reported 0.9% surge in July.
President Donald Trump called for the Fed to make a “big” rate cut after the data.
Oracle Share Price Jumps
Oracle share price surged 36%, lifting the benchmark indices. Oracle shares soared 35.95% to $328.33 apiece, its biggest one-day percentage gain since 1992. The company’s stock market value reached $922 billion, surpassing the values of Eli Lilly, JPMorgan Chase and Walmart.
AI Stocks Rally
Artificial intelligence-related chip stocks also rallied on Wednesday, fuelling gains in the broader market. Nvidia share price rallied 3.8%, Broadcom shares jumped 10% and Advanced Micro Devices stock price gained 2.4%. The PHLX chip index rose 2.3% to a record high.
Shares of data center power suppliers also rose, with Constellation Energy, Vistra and GE Vernova all rising more than 6%.
S&P 500 Target Raise
Barclays and Deutsche Bank raised their year-end targets for the S&P 500, citing stronger corporate earnings, resilient US economic growth and optimism around artificial intelligence, Reuters reported.
Deutsche Bank increased its target to 7,000 from 6,550, while Barclays raised its forecast to 6,450 from 6,050. The S&P 500 index touched a record high of 6,555.97 earlier on Wednesday and has risen 11.2% so far this year.
(With inputs from Reuters)
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