Stocks head for more records after an encouraging report on inflation

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NEW YORK (AP) — Wall Street is heading for more records following surprisingly encouraging reports on inflation and on profits for companies benefiting from the artificial-intelligence boom. The S&P 500 rose 0.5% in early trading Wednesday and was on track to set an all-time high for a second straight day. The Dow Jones Industrial Average slipped 75 points, and the Nasdaq composite was up 0.5%. Tech giant Oracle rose sharply after saying AI-related demand is set to send its revenue soaring. The yield on the 10-year Treasury eased to 4.05% after an encouraging inflation report on wholesale prices bolstered expectations for cuts to interest rates.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Wall Street is moving toward new highs highs Wednesday ahead of the latest government report on inflation.

Futures for the S&P 500 and Nasdaq, both of which topped records a day earlier, rose between 0.2% and 0.3% before the bell. Dow futures ticked 0.2% lower.

Shares of Oracle surged more than 32% in off-hours trading after it reported that it had signed four multi-billion dollar contracts that would push its cloud infrastructure revenue up 77% this fiscal year, to $18 billion. Oracle’s cloud infrastructure business provides the building blocks -- hardware and software -- that enables cloud computing and the the delivery of applications over the internet.

Klarna, the Swedish “buy now, pay later” financial services provider, will trade for the first time as a public company Wednesday after it announced a public offering of its shares at $40 each, about $4 higher than it previously estimated.

And the Labor Department will issue its August report on inflation at the wholesale level, which tracks prices in the supply chain before they get to the consumer. Wholesale inflation has been moderating for years post-COVID, but surged in July, a sign that President Donald Trump’s sweeping tariffs were pushing costs up.

Stubborn inflation complicates the Federal Reserve's next interest rate decision, which most analysts assumed would be its first cut of 2025. However, recent data showing a weakening U.S. labor market has raised expectations of up to three rate cuts before the year is out.

“The broader narrative is increasingly anchored on expectations that the Fed will deliver a rate cut at next week’s meeting,” said Ahmad Assiri, research strategist at Pepperstone.

While interest rate cuts can invigorate a slowing economy and labor market, they can also ignite inflation, which up until just recently has been the Fed's primary concern since the U.S. economy leapt out of the COVID-19 recession.

The government reports on consumer inflation Wednesday, which could tell economists whether the higher producer prices are being passed onto consumers.

Japan's benchmark Nikkei 225 gained 0.9% to finish at 43,837.67. Australia's S&P/ASX 200 added 0.3% to 8,830.40. South Korea's Kospi jumped 1.7% to 3,314.53.

Hong Kong's Hang Seng rose 1.0% to 26,200.26, while the Shanghai Composite edged up 0.1% to 3,812.22. Uncertainty is still in the air over U.S.-China tariff issues as bilateral talks continue.

U.S. President Donald Trump has raised taxes on imports from China, triggering a tit-for-tat tariff war. The U.S. is currently charging an additional 30% tariff on Chinese goods and China is charging a 10% tariff under a de-escalation deal reached in May.

In Europe at midday, France’s CAC 40 rose 0.5%, Germany’s DAX edged up 0.1% and Britain’s FTSE 100 rose 0.3%.

In energy trading, benchmark U.S. crude added 58 cents to $63.21 a barrel. Brent crude, the international standard, also rose 59 cents, to $66.98 a barrel.

The rise in oil prices came amid escalation of tensions in the Middle East. Israel struck the headquarters of Hamas’ political leadership in Qatar on Tuesday as the group’s top figures gathered to consider a U.S. proposal for a ceasefire in the Gaza Strip.

Gold prices were hanging around record highs at $3,694 per ounce.