Lead — U.S. equity benchmarks advanced on Wednesday as traders awaited the Federal Reserve’s January meeting minutes while technology names led gains. The S&P 500 rose about 0.8%, the Nasdaq Composite added roughly 1.2% and the Dow Jones Industrial Average climbed 307 points, or 0.6%. Nvidia shares gained after Meta said it will deploy millions of Nvidia AI chips in its data-center expansion, and other large-cap moves — including stake changes at Amazon and Micron — helped underpin the rally. Oil also jumped amid renewed tension in talks between the U.S. and Iran, lifting energy stocks alongside the broader market.
Key takeaways
- The S&P 500 increased ~0.8%, the Nasdaq Composite rose ~1.2%, and the Dow added 307 points (0.6%) on Wednesday.
- Nvidia climbed more than 2% after Meta announced plans to use millions of Nvidia chips in its data-center build-out.
- Amazon advanced after filings showed Pershing Square boosted its stake by 65% in Q4, making Amazon the hedge fund’s third-largest holding.
- Micron jumped over 5% after Appaloosa Management disclosed a larger holding in the chipmaker.
- U.S. crude rose $1.99 to $64.32 per barrel and Brent climbed $2.04 to $69.46, following tense U.S.-Iran diplomacy remarks.
- Housing starts came in at just over 1.4 million for December, beating the 1.31 million consensus; building permits were 1.45 million.
- Durable goods orders fell 1.4% in December, softer than positive segments but better than the 2% decline analysts had expected; ex-transportation orders rose 0.9%.
- Markets are positioned cautiously ahead of the Federal Reserve minutes and Friday’s PCE inflation reading, the Fed’s preferred gauge.
Background
Equity markets entered Wednesday in a holding pattern as investors digested earnings, activist fund moves and geopolitical headlines while waiting for the Fed’s minutes from its January policy meeting. The minutes are expected to give clarity on policymakers’ views about the inflation trajectory and the possible path for interest rates, a key input for asset allocation decisions. Technology stocks have been a focal point this earnings season: AI-related optimism has buoyed some mega-cap names, but worries about longer-term disruption and stretched expectations have pressured parts of the software sector.
Separately, activist and hedge-fund filings have influenced individual stock flows: Pershing Square’s documented increase in Amazon and Appaloosa’s larger stake in Micron are the latest examples of investors reweighting portfolios after recent pullbacks. Energy prices have been sensitive to diplomatic developments between the U.S. and Iran, where a mixture of optimistic turnout from talks and pointed public statements about “red lines” has driven intraday volatility. Against this backdrop, macroeconomic prints — housing starts, permits and durable goods — offered a mixed but modestly constructive signal on the domestic economy.
Main event
Markets moved higher midweek as Nvidia outperformed following Meta’s announcement that it will deploy millions of Nvidia accelerators in its data-center expansion. Traders viewed the news as incremental validation of Nvidia’s dominant position in AI infrastructure, supporting the stock’s advance of more than 2% on the session. Other members of the so-called “Magnificent Seven” also reacted to specific catalyst: Amazon rose after regulatory filings showed Pershing Square increased its Q4 stake by 65%, making it Pershing’s third-largest holding and helping the stock snap a nine-day losing streak.
Chipmaker Micron climbed after Appaloosa Management disclosed an increased position, a move investors interpreted as confidence in memory demand recovery tied to AI and data-center spending. Meanwhile, Palo Alto Networks shares fell after the cybersecurity firm reported better-than-expected fiscal Q2 results but issued cautious guidance, prompting an after-hours decline of roughly 8% and comments from CEO Nikesh Arora defending the resilience and centrality of cybersecurity amid AI adoption.
Energy markets were active as U.S. crude rose over 3% to about $64.32 per barrel and Brent pushed to roughly $69.46, following Vice President J.D. Vance’s comments that Iran had not met U.S. “red lines” in recent nuclear discussions and that the use of force remained a reserved option. The moves came after separate diplomatic meetings in Geneva involving U.S. envoys and Iranian officials; Iranian Foreign Minister Abbas Araghchi described the talks as constructive, adding nuance that briefly eased prices on Tuesday before Wednesday’s rebound.
Analysis & implications
Short-term market direction appears driven by a combination of company-specific news and macro data flow rather than a single dominant theme. The Fed minutes — due this week — are likely to be the central macro event, as investors seek guidance on the committee’s tolerance for inflation overshoots and the likely horizon for rate easing or additional tightening. Given the S&P’s roughly 0.8% rise and the Nasdaq’s 1.2% gain, traders are currently rewarding clear, positive corporate developments, especially those tied to AI adoption, while penalizing firms that temper near-term guidance.
On the sector level, technology remains the most bifurcated area: AI hardware beneficiaries like Nvidia continue to attract demand, while some software names face skepticism about substitutability and margin pressure. The market’s reaction to Palo Alto’s guidance illustrates how quickly sentiment can shift when growth expectations are disappointed, even if headline results beat estimates. This dynamic suggests heightened earnings-season volatility will persist as investors differentiate between durable revenue gains and transient demand swings.
Rising oil prices introduce a mixed economic signal. Higher crude supports energy-sector profits and related equities but also lifts input costs for households and businesses, which can complicate the Fed’s inflation outlook. If oil remains elevated into upcoming CPI/PCE releases, policymakers could view energy as an upside risk to inflation, potentially delaying easier policy. Traders will therefore watch Friday’s PCE read closely for any signs that higher fuel prices are bleeding into broader price measures.
Comparison & data
| Market/Item | Change (Wednesday) |
|---|---|
| S&P 500 | +0.8% |
| Nasdaq Composite | +1.2% |
| Dow Jones Industrial Average | +307 pts (0.6%) |
| Nvidia | +>2% |
| Micron | +>5% |
| U.S. crude | +$1.99 to $64.32/bbl (+3.19%) |
| Brent | +$2.04 to $69.46/bbl (+3.03%) |
These figures show a clear day-to-day tilt toward cyclical and AI-related winners, with energy’s jump amplifying the market’s macro sensitivity. Housing starts and building permits beating expectations suggest ongoing construction activity, while the modest decline in durable goods orders — less severe than feared — underscores a uneven but not collapsing manufacturing picture. Together, the data point to a domestic economy moving through mixed signals rather than a clear acceleration or contraction.
Reactions & quotes
“No one knows exactly how this is going to play out. From our perspective, though, at least you have reset those expectations where if earnings do come through, a little bit of good news can go a long way.”
Keith Lerner, Chief Market Strategist, Truist Wealth
Lerner’s comment frames the current environment as one where companies that exceed lowered expectations may see outsized positive responses.
“I’m still confused why the market is treating AI as a threat to at least cybersecurity. Customers are driving more consistency in their security stack to respond faster using AI.”
Nikesh Arora, CEO, Palo Alto Networks
Arora defended cybersecurity demand as complementary to AI adoption even as his company issued cautious guidance that rattled investors.
“Markets are likely in a semi-holding pattern ahead of the PCE report, especially as the AI trade becomes increasingly difficult to navigate.”
Anthony Saglimbene, Chief Market Strategist, Ameriprise
Saglimbene highlighted how macro releases and AI-driven stock flows are jointly keeping traders cautious.
Unconfirmed
- Any definitive market-moving interpretation of the Fed minutes before their release would be premature; specific voting rationales and dissent are yet to be confirmed until publication.
- The long-term scale of Meta’s chip purchases beyond the announced deployment remains unspecified; exact shipment timing and contract structure have not been fully disclosed.
- Reports on private diplomatic conversations between U.S. envoys and Iranian officials include differing characterizations; outcomes and follow-up steps have not been independently verified.
Bottom line
Wednesday’s session reflected a market balancing act: company-level AI adoption news and activist stake moves supported risk assets, while geopolitical frictions and pending macro releases kept positioning cautious. Technology’s leadership coexisted with clear sector dispersion — some AI beneficiaries advanced while parts of software underperformed on forward guidance concerns.
Investors should watch the Fed minutes and Friday’s PCE closely; either release could reshape rate expectations and thus alter the backdrop for equity valuations, especially for long-duration growth names. In the near term, expect continued volatility tied to earnings guidance, activist disclosures and geopolitical headlines that can move commodity prices and inflation expectations.