Wall Street closed broadly higher on Wednesday after a cooler-than-expected May CPI print gave investors fresh confidence that the Federal Reserve may have room to cut rates before year-end. The S&P 500 added 0.7%, the Nasdaq led gains with a 1.1% advance, and even the more defensive Dow managed a solid 0.4% rise. Volatility eased, with the VIX slipping to 17.4 — its lowest reading in three weeks.
The inflation report was the clear catalyst. Headline CPI rose just 0.1% month-over-month, bringing the year-over-year rate to 3.1%, below the 3.3% consensus estimate. Core CPI also came in soft, easing fears that sticky services inflation would force the Fed to keep rates elevated deep into 2026. Traders quickly repriced rate-cut expectations, with fed funds futures now pricing in nearly two cuts by December.
NVIDIA was the standout winner of the session, surging 4.3% after news broke of a sweeping AI infrastructure deal with a major cloud provider. The move lifted the broader semiconductor sector, with AMD and Broadcom also posting solid gains. Meanwhile, CVS Health was the notable decliner, falling 3.8% on a guidance cut that rattled healthcare names broadly.
Gold held near record levels at $3,185 an ounce as the dollar softened on the dovish CPI read. Oil slipped slightly to $74.20 as demand uncertainty lingered despite the equity rally.