The S&P 500 gained 19.51 points on Wednesday, August 12, closing at 7,747.46 after opening in record territory on the back of an in-line July inflation report and a cluster of strong AI infrastructure earnings. The index ended the session 0.25% higher but just below its all-time closing high of 7,757.64, set on August 7. The Nasdaq Composite rose approximately 0.7% as AI-related stocks led the advance, while the Dow Jones Industrial Average edged up roughly 0.1%. The combination of moderating consumer prices and accelerating demand for AI compute capacity gave investors two of the catalysts they had been waiting for heading into mid-August.
Key Takeaways
- The S&P 500 closed at 7,747.46, up 0.25%, after opening above its prior record; the index remains within 10 points of its August 7 all-time high of 7,757.64.
- July CPI rose 0.1% month over month and 3.4% annually, both in line with consensus, while core CPI came in at 0.2% monthly and 2.5% annually, easing immediate pressure for a September rate hike.
- CME FedWatch data showed approximately 58% probability of no change to the Fed’s 3.50% to 3.75% target range following the release, up from just over 50% beforehand.
- CoreWeave surged roughly 20%, Super Micro Computer gained approximately 15%, and Nebius Group rose 16.5%, reflecting a broad repricing of AI infrastructure equities following strong Q2 results.
- The 10-year Treasury yield hovered near 4.7%, a level that has acted as a ceiling on equity valuations in recent sessions.
- Markets reversed Tuesday’s losses, when the Dow, S&P 500, and Nasdaq each fell 0.3% to 0.6% on escalating U.S.-Iran tensions over the Strait of Hormuz.
The CPI Print Landed Exactly Where Markets Needed It
The Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers increased 0.1% on a seasonally adjusted basis in July, following a 0.4% decline in June. On an annual basis, headline CPI slowed to 3.4% from 3.5%, marking the second consecutive monthly deceleration and moving further from the 2026 high of 4.2% reached in May when the energy shock from the Strait of Hormuz conflict was at its peak.
Core CPI, which excludes food and energy, rose 0.2% for the month and 2.5% year over year, each declining 0.1 percentage point from June. Every reading matched the Dow Jones consensus forecast. Shelter costs, which have been the most persistent contributor to above-target inflation, rose just 0.1% in July, though the category still accounted for roughly two-thirds of the headline monthly increase. A 2.8% decline in lodging-away-from-home costs helped offset a 0.3% increase in owners’ equivalent rent.
Energy prices fell 1.5% on a monthly basis, driven by a 2.9% decline in gasoline, though the annual energy index remains up 14.7%. That monthly improvement may already be in the rearview mirror: Brent crude rose above $90 per barrel on Wednesday morning and U.S. crude approached $84, reflecting the ongoing Hormuz impasse. The national average gasoline price also ticked back up to $4.03 per gallon.
For the Federal Open Market Committee, which does not meet again until September 16-17, the report removed urgency without removing uncertainty. The fed funds target range remains at 3.50% to 3.75%, and CME FedWatch data following the release showed approximately 58% probability of a hold in September, a meaningful shift from just above 50% prior to the data. The committee will see both the August CPI and August employment report before making a decision.
AI Infrastructure Earnings Drove the Session’s Outperformers
While the CPI print set the macro floor, the session’s sector-level action was dominated by AI infrastructure companies reporting strong second-quarter results. CoreWeave (CRWV) surged roughly 20% after reporting Q2 revenue of $2.58 billion, a 112% year-over-year increase that topped Wall Street estimates, alongside a $104 billion revenue backlog. Super Micro Computer (SMCI) advanced approximately 15% after its revenue forecast exceeded analyst expectations. Nebius Group (NBIS) rose 16.5% after posting Q2 revenue of $582.3 million, beating LSEG estimates of $572.75 million, with its core AI cloud business reporting nearly sixfold revenue growth and four contracts averaging more than $1 billion each during the quarter.
The clustering of AI earnings beats on the same day as a cooperative inflation print created a dual-catalyst session that pushed the Nasdaq to its strongest performance of the week. The Global X Data Center & Digital Infrastructure ETF, which had declined 1% on August 10 amid profit-taking, reversed sharply. Nvidia, which reports its own Q4 results on August 26, gained 1.70% and was among the top contributors to the Dow.
Treasury Yields Remain the Binding Constraint
The 10-year Treasury yield hovered near 4.7% throughout the session, a level that has functioned as a soft ceiling on equity multiples in recent weeks. The yield has been held elevated by a combination of persistent above-target inflation, volatile energy costs, and a Treasury supply calendar that has required the market to absorb significant new issuance.
The in-line CPI print did not materially move yields lower, which may explain why the S&P 500’s early-session gains of roughly 0.5% moderated to a 0.25% close. Equity markets have historically struggled to sustain new highs when the 10-year yield is rising or holding above key thresholds, and 4.7% sits uncomfortably close to the 5% level that prompted corrections in both 2023 and 2025. Thursday’s Producer Price Index report for July, due at 8:30 a.m. ET, will provide the next data point on whether input costs are following consumer prices downward.
Tuesday’s Pullback Reflected Geopolitical Risk Repricing
Wednesday’s gains reversed a session of losses on Tuesday, August 11, when the Dow fell 0.3%, the S&P 500 dropped 0.3%, and the Nasdaq declined approximately 0.6%. The Tuesday selloff was driven by hardening rhetoric from Iran over the Strait of Hormuz, with Tehran’s Revolutionary Guards declaring the waterway “a theatre of war” and releasing a list of preconditions for reopening that includes sanctions relief, frozen asset releases, and war reparations.
The Tuesday-to-Wednesday reversal illustrates a pattern that has defined the S&P 500’s path to 25 record closes in 2026: the index absorbs geopolitical or macro shocks quickly, then rotates into whichever sector has the freshest positive catalyst. The Russell 2000 posted a modest gain on Tuesday even as large-cap indexes declined, reflecting a brief rotation into small-cap value. On Wednesday, the Russell 2000 rose 0.32%, but leadership shifted back to growth and technology as the AI earnings cycle reasserted itself.
Rotation Dynamics and Market Breadth Show a Broadening Rally
Beneath the headline indexes, the market’s internal structure has shifted notably over the past two months. From early April through late July, the S&P 500 Equal Weight Index outperformed the cap-weighted S&P 500, a signal that buying interest was broadening beyond the handful of mega-cap technology stocks that dominated the first quarter. Value stocks, industrials, and financials all led during that stretch.
Over the past two weeks, however, the cap-weighted index has pulled back ahead as technology and AI-related names surged on earnings catalysts and renewed confidence in the AI capital expenditure cycle. Nvidia, Apple, and the AI infrastructure complex have driven the reversion. Whether the equal-weight index can resume its outperformance depends on whether the September rate decision and upcoming economic data favor cyclical sectors or continue rewarding growth. With 86% of S&P 500 companies beating estimates this earnings season, the fundamental floor under the broader market remains intact, but the marginal dollar is flowing disproportionately toward AI infrastructure plays with demonstrated revenue acceleration.
What to Watch for the Rest of the Week
The data and earnings calendar remains active through Friday. Thursday brings the July Producer Price Index at 8:30 a.m. ET, alongside earnings from Applied Materials (AMAT), which will provide a read on semiconductor capital equipment demand, and Nu Holdings (NU), the Latin American digital banking platform. Friday’s retail sales data for July will offer a look at consumer spending in a month when real wages continued to decline. Cisco Systems (CSCO), which reported Q4 results after the close on Wednesday, is expected to provide commentary on enterprise IT spending trends. The Strait of Hormuz situation remains a background variable capable of overriding any domestic data point if oil prices spike further.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, an investment recommendation, or a solicitation to buy or sell securities. Readers should conduct their own research and consult a licensed financial advisor before making investment decisions.
FAQs
Did the S&P 500 set a new record on August 12?
The S&P 500 opened in record territory on August 12 but closed at 7,747.46, slightly below its all-time closing high of 7,757.64 set on August 7. The index gained 0.25% for the session after early gains of approximately 0.5% moderated through the afternoon.
What did the July CPI report show?
The Consumer Price Index rose 0.1% month over month and 3.4% on an annual basis, both in line with consensus forecasts. Core CPI, excluding food and energy, increased 0.2% monthly and 2.5% annually. The report showed continued deceleration from the 2026 high of 4.2% reached in May.
What is the current Fed funds rate and what are markets pricing for September?
The Federal Reserve’s target range is 3.50% to 3.75%. Following the July CPI release, CME FedWatch data showed approximately 58% probability of no rate change at the September 16-17 meeting, up from just above 50% before the data.
Which stocks led the market higher on August 12?
AI infrastructure stocks drove the session’s gains. CoreWeave surged roughly 20% on strong Q2 earnings, Super Micro Computer gained approximately 15% on elevated revenue guidance, and Nebius Group rose 16.5% after reporting sixfold growth in AI cloud revenue. Nvidia gained 1.70% and was among the Dow’s top contributors.
