The S&P 500 jumped to a fresh record on Wednesday after a reading on wholesale prices unexpectedly declined, a welcome development for investors clamoring for a Federal Reserve rate cut next week to boost the economy. Oracle shares led the gains with a more than 30% surge following an eye-popping forecast tied to artificial intelligence.

The broad market index climbed 0.5%, while the Nasdaq Composite gained 0.3%. The Nasdaq, alongside the S&P 500, had reached a new all-time intraday high in the trading day. The Dow Jones Industrial Average lost 106 points, or 0.2%.

Market sentiment was boosted following the latest producer price index reading, which showed that wholesale prices fell 0.1% in August. Economists polled by Dow Jones had estimated a 0.3% gain. Core PPI, which excludes food and energy prices, likewise declined 0.1%, while the Dow Jones forecast called for 0.3%.

The report serves as a positive sign regarding the state of inflation in the U.S. economy heading into Thursday's more closely watched consumer price index reading.

Economists expect the CPI report to show monthly increases of 0.3%, according to Dow Jones. This includes the headline all-items index as well as the core reading that excludes volatile food and energy prices. If this materializes, the annual headline CPI rate would be pushed up to 2.9%, though the core reading is expected to stay unchanged at 3.1%.

If the numbers come around these estimates, the Federal Reserve will have more ammunition to deliver another rate cut at its September meeting.

Traders currently see a certainty that the Fed will cut by at least a quarter point, per the CME Fedwatch tool based on fed futures trading. They also increased their bets following the PPI data that the central bank could make an even deeper cut to rates, by 50 basis points, or a half percentage point.

Source : CNBC