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US stocks closed higher on Wednesday, with the S&P 500 and the Nasdaq each rallying more than 1% as earnings from neocloud firm CoreWeave eased investor concerns about the sustainability of the AI trade, while Nvidia stabilised after two consecutive sessions of sharp declines.
Battered CoreWeave shares surged 24.7%, their biggest daily percentage jump in more than three months, to close at their highest level in two weeks. The company said it expected to become profitable in the first half of 2028 on an adjusted basis, seeking to reassure investors that strong demand and customer commitments could support its debt-fuelled expansion.
Sentiment improved across AI infrastructure stocks, with Nebius Group surging 15.4% and Applied Digital jumping 7.4%.
Nvidia advanced after shedding about $430 billion in market capitalisation over the previous two sessions, as investors worried about CEO Jensen Huang's relationship with a businesswoman alleged to be a Chinese spy.
Equities have been volatile in recent days. Investors have expressed concerns about increased regulation in the AI sector following sweeping Democratic victories in last week's US midterm elections. Those worries, alongside concerns about Nvidia's leadership, have put pressure on one of the biggest pillars of the current bull market.
Contributing to the choppy trading, investors have been encouraged by cooling oil prices but concerned about hotter-than-expected inflation data that pushed Treasury yields sharply higher.
"Everybody's looking for a canary in a coal mine every single day, every minute of every day, and then they're reacting every single day," said Thomas Martin, senior portfolio manager at Globalt in Atlanta.
"What we've seen is that you've gone back and forth, back and forth, back and forth between AI is good, AI is not so good. We're worried about it, then oh, it's great."
The Dow Jones Industrial Average rose 254.60 points, or 0.49%, to 52,486.49. The S&P 500 gained 98.45 points, or 1.31%, to 7,619.38, while the Nasdaq Composite advanced 400.31 points, or 1.60%, to 25,466.19.
TECH SECTOR LEADS MARKET GAINS
The Philadelphia Semiconductor Index jumped 5.7% to close at its highest level since November 3, with every component of the index advancing.
Recent heavy selling prompted some investors to buy the dip, although early indicators suggested it was too soon to conclude that the worst was over.
Investors bought equities even during last week's selloff, with all net inflows coming through exchange-traded funds and institutional clients leading the purchases, Bank of America Global Research analysts said in a note.
The S&P 500 technology index rose 2.7%, making it the best-performing of the 11 major S&P sectors. It has gained in three of the past four sessions.
The CBOE Volatility Index fell for the fourth consecutive session, closing at a one-week low of 17.49. Last week, Wall Street's fear gauge had climbed to its highest level in more than seven months.
ANTHROPIC IPO DRAWS ATTENTION
Investors also assessed the terms announced by Anthropic on Tuesday for its blockbuster initial public offering. The creator of the Claude chatbot is targeting a valuation of up to $1.4 trillion through the share sale.
Vanda Research said in a note that the IPO could attract record purchases from retail investors, potentially surpassing SpaceX as one of the biggest single-day retail buying events.
Hotter-than-expected inflation data released on Tuesday cemented market expectations that the US Federal Reserve would raise interest rates next month. Traders are now fully pricing in an increase of at least 25 basis points, with a 10.4% probability of a 50-basis-point hike, according to CME FedWatch.
Comments from several Fed officials also suggested that the US central bank could consider a more aggressive rate-hiking path as inflationary pressures worsen.
The US bond market remained closed on Wednesday for Veterans Day.
Advancing stocks outnumbered declining ones by a 1.48-to-1 ratio on the New York Stock Exchange and by a 1.77-to-1 ratio on the Nasdaq.
The S&P 500 recorded 17 new 52-week highs and no new lows, while the Nasdaq Composite registered 77 new highs and 159 new lows.
Trading volume on US exchanges stood at 14.74 billion shares, compared with the 18.68 billion average for a full session over the past 20 trading days.
