The S&P 500 closed at a record high of 7,800, gaining 0.65% after touching an intraday all-time high of 7,816.70 points, marking the index's 27th record close of the year. The Nasdaq 100 gained 0.81% to 26,803.03, while the Dow added 0.13% to 53,839.99. The latest close demonstrates continued momentum from the previous session's intraday record high, with the rally supported by Brent crude oil futures trading flat with negative bias at $87 per barrel, down 0.06%. The S&P 500 is up over 14% in the last six months, reflecting strong performance across major indices. The latest surge comes as money markets are pricing in less than a 40% chance of a September Fed hike, with Federal Reserve rate hike odds dropping below 50% for September after tame inflation data. Jeremy Siegel, senior economist at WisdomTree and professor emeritus of finance at the Wharton School, said the Federal Reserve will likely skip a rate hike in September if oil holds near $80 a barrel. Goldman Sachs cut its forecast for the Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation gauge, after seeing the data, now expecting the gauge to rise just 0.2% for the month. Goldman Sachs Vice Chairman Rob Kaplan has backed the Fed's July rate hold, describing the decision as 'absolutely correct' because officials still have time to study inflation and economic activity before their next meeting.
The technology sector emerged as the primary driver of the market's latest surge, with memory chip makers Sandisk and Micron Technology surging 13.67% and 4.23% respectively, extending a run that has made semiconductor names this year's biggest gainers. Meta Platforms shares climbed 2.78% to $594.97, while Netflix rose 5.43% after investor Bill Ackman disclosed a new stake in the streaming company. Super Micro Computer leapt more than 4% after the company's guidance for the first quarter surpassed estimates. Palantir Technologies (PLTR) continues to deliver exceptional performance with a 40 percent weekly gain following strong earnings, revenue, and guidance that drove its best week in 2-1/2 years. Zebra Technologies (ZBRA) also posted impressive results with a 28 percent weekly gain after beating estimates, while CEO William Burns highlighted "early traction" in new computers and wearables with AI applications. The rally was further supported by Airbnb (ABNB), which achieved its biggest one-day gain ever after earnings and revenue beat estimates, with the company citing AI improvements to both products and operations. Recent AI infrastructure-related stocks jumped on earnings, with Nebius Group NV surging 34% and Coreweave Inc. gaining 19%, recovering from their July lows. Communication services led Thursday's gains with a 1.56% advance, followed by real estate at 1.34%, as both sectors are sensitive to borrowing costs. Jeremy Siegel noted that artificial intelligence spending is lifting earnings well beyond the hyperscalers that build AI infrastructure, with companies across sectors using the technology to cut costs and widen margins.
The Bureau of Labor Statistics reported that the Producer Price Index for final demand was unchanged in July, with economists having forecast a 0.2% rise. Annual producer-price growth slowed to 4.7% from 5.5% in June, following Wednesday's Consumer Price Index report that showed prices rose just 0.1% for the month and 3.4% over the past year. As reported by Reuters, "I don't think this month's data alone is enough to sway the Fed either way. However, the energy price shock does not appear to be feeding meaningfully into other core inflation categories." The data follows mild consumer inflation that delivered exactly what markets needed, with core prices rising just 0.2% month-over-month and 2.5% year-over-year, matching the slowest annual pace since March 2021. Excluding food and energy, producer prices jumped 4.2% from a year ago and 0.2% compared with June. Jeremy Siegel tied part of that decline to the stock market's own gains, saying rising equity values flow into a portfolio management subcomponent inside the PCE index, pushing it lower. The combination of tame producer and consumer inflation has shifted market pricing dramatically, with the Federal Reserve rate hike odds dropping from 67% at the end of July to 43% last week and further declining below 50% for September. Glen Smith at GDS Wealth Management noted that "inflation, while still way above the Fed's 2% target, is showing signs of stabilization following the oil-driven surge since the start of the Iran war."
Consumer price inflation (CPI) for July fell to 3.4% year-over-year from 3.5%, providing additional support for the Federal Reserve's cautious stance. According to Bloomberg News, economists at Citigroup Inc., Morgan Stanley, and Jefferies project the July core PCE price to rise 0.2%, which will be closely watched by the Federal Reserve as their preferred inflation gauge. The central bank is scheduled to meet next month from September 15–16, 2026, with today's PPI data holding particular interest as it indicates into the personal consumption expenditures price index. The Bureau of Economic Analysis is also expected to release July PCE price data on August 26, another indicator that will be considered by the Fed in determining their policy path. Following the latest CPI data, traders placed a 67% probability on no September rate change and about a 34% chance of a quarter-point increase, according to Polymarket figures. However, Bank of America still expects three more Fed hikes, arguing the disinflation trend remains incomplete. Jeremy Siegel pointed to a leverage-driven liquidity scare from earlier this month, saying it exposed limited excess risk in the market rather than a deeper problem, and stocks have since rebounded to new highs. Thursday's tame inflation print, paired with last week's softer-than-expected jobs report, will give Fed Chair Kevin Warsh more breathing room, according to Arun Sundaram at CFRA. However, he cautioned that "the Fed's decision is far from settled."
Market breadth indicators showed strong participation with advancing stocks outnumbering decliners by more than 2 to 1 on both the NYSE and Nasdaq. The S&P 500 recorded 28 new 52-week highs and no new lows, while the Nasdaq posted 114 new highs and 52 new lows. Among individual stocks, Cisco Systems dropped 8.4% to $113.47 despite an upbeat revenue forecast that fell short of high expectations, while Tapestry plunged more than 16% on a muted revenue forecast. Netflix climbed 5.4% after investor Bill Ackman disclosed a new stake in the streaming company, with the private equity firm's potential deal to acquire Workday for near $43 billion sending Workday shares jumping 18%. Dell Technologies and HP both gained after quarterly results from China's Lenovo beat expectations, with the strong earnings across sectors supporting US stocks after a volatile start to the second half of 2026. Jay Hatfield, chief executive of Infrastructure Capital Advisors, noted that "The AI earnings-driven tech boom continues. It's an earnings boom, not a bubble." Jeremy Siegel flagged a rotation out of expensive growth stocks and into cheaper value names trading around 15 times earnings, saying many of those companies have not yet captured AI-driven efficiency gains, leaving room to catch up. Some of the main market moves included the S&P 500 rising 0.7%, the Nasdaq 100 gaining 1.15%, and the Dow Jones Industrial Average rising 0.1%, while the MSCI World Index rose 0.5%. Artificial intelligence hardware and infrastructure company Cerebras stock slipped 11.85% to $231.01, while Stubhub Holdings witnessed a 10% fall to $7.68 after the company's quarterly expenses jumped 37%, offsetting a 33% jump in revenue for the June quarter.
