Stock markets rebound on AI optimism, but inflation concerns persist

Equity markets are recovering this Wednesday, though inflationary pressures remain unresolved.

CoreWeave's latest financial results have given investors a reason to return to AI and semiconductor stocks that had been under pressure. Nasdaq 100 futures are leading the rebound. Meanwhile, the US dollar has strengthened across major currencies following Tuesday's higher-than-expected CPI data and additional hawkish comments from Federal Reserve officials.

Traders are now weighing two competing narratives. The outlook for AI spending is providing some relief for technology stocks. On the other hand, the inflation and interest rate trajectory offers much less comfort for the broader economy.

The latest round of US consumer price data kept pressure on the Federal Reserve. Headline inflation rose 0.4% month-over-month, above the 0.3% forecast. Core prices increased 0.3%, versus expectations for 0.2%. This marked the third straight month where the rounded core reading stood at 0.3%.

Energy price gains moderated from September, but that did not translate into a slower core inflation rate. Shelter costs and other service prices continued to contribute to the upward pressure.

The message from Fed officials is growing increasingly clear:

• Federal Reserve Governor Christopher Waller said a 50-basis-point rate increase is under consideration. His remarks before the CPI release tied the possibility of a larger move to another core reading of 0.3% or higher.

• Dallas Fed President Lorie Logan stated that at least two additional quarter-point hikes are needed, with room to act more quickly if necessary.

• Chicago Fed President Austan Goolsbee described inflation as “borderline disturbing,” pointing to service inflation that has not moderated.

• Philadelphia Fed President Anna Paulson said further gradual increases are appropriate, but a worsening inflation outlook could demand more aggressive steps. She cited a stronger-than-expected economy and a robust, stable labor market.

• Federal Reserve Governor Michelle Bowman said the failure of inflation to trend lower should give policymakers pause. The question, she said, is what pace and timeline are required to address it.

The debate appears to be moving toward how quickly the Fed needs to tighten. A half-point increase is possible, but not yet decided. That adds another risk for traders to consider. Markets are pricing in a 13% probability of a 50-basis-point hike.

The US Treasury market is closed today for Veterans Day. Yesterday’s levels therefore serve as the reference:

• The 2-year Treasury yield rose roughly 20 basis points.

• The 10-year Treasury yield closed at 5.00%, up from a low of 4.817% last Thursday.

That represents an approximately 18.3-basis-point increase in the 10-year yield from Thursday’s low. The 2-year move is especially relevant for Fed policy expectations, as that maturity is sensitive to short-term rate outlooks. The 10-year yield has broader implications for mortgages, corporate borrowing, and equity valuations.

Today’s stock rebound will have to wait until Thursday for a full cash Treasury market reaction. The holiday does not eliminate the interest rate headwind.

Futures data indicates:

• Dow Industrial Average futures: Up 88 points.

• S&P 500 futures: Up 71 points.

• Nasdaq 100 futures: Up 555 points.

CoreWeave surged more than 16% in premarket trading after reporting strong results and forecasting adjusted profitability in the first half of 2028. That provided some reassurance about its financial health and the cost of expanding AI infrastructure.

Nvidia rebounded roughly 4.4% after two sharply lower sessions. Micron and Marvell also gained. The concentration of gains in AI and semiconductor names helps explain why the Nasdaq is outperforming the Dow.

Buyers have found a reason to step back in after the recent selling. That is encouraging for the AI trade, but one earnings report does not resolve the tension between strong investment demand and a higher cost of financing. The next test is whether the gains hold once regular trading begins.

The dollar is stronger against every major currency in the provided snapshot. Its largest gain is against the Swiss franc. The Australian dollar is holding up best, with only a modest decline against the greenback.

From the dollar’s perspective:

• EURUSD: 1.1138, down 0.22%.

• GBPUSD: 1.3313, down 0.21%.

• USDJPY: 159.16, up 0.27%.

• USDCHF: 0.8292, up 0.50%.

• USDCAD: 1.4231, up 0.30%.

• AUDUSD: 0.6862, down 0.04%.

• NZDUSD: 0.5586, down 0.29%.

The dollar’s ability to hold its gains while technology shares rebound is worth monitoring. So far, improved equity sentiment has not been enough to reverse the currency market’s reaction to inflation and the Fed.

Based on the displayed session highs and lows and the 22-day average ranges:

• EURUSD: 1.1131–1.1170 — 39 pips, roughly 57% of its 68-pip average.

• GBPUSD: 1.3308–1.3358 — 50 pips, roughly 64% of its 78-pip average.

• USDJPY: 158.67–159.18 — 51 pips, roughly 58% of its 88-pip average.

• USDCHF: 0.8249–0.8296 — 47 pips, roughly 80% of its 59-pip average.

• USDCAD: 1.4182–1.4233 — 51 pips, roughly 74% of its 69-pip average.

• AUDUSD: 0.6862–0.6888 — 26 pips, roughly 49% of its 53-pip average.

• NZDUSD: 0.5584–0.5614 — 30 pips, roughly 59% of its 51-pip average.

AUDUSD has covered the smallest portion of its normal range. USDCHF has used the most, though it remains below its average. There is still room for further movement in the major pairs if prices break their session extremes. The averages provide context; they do not require prices to travel further or prevent them from exceeding a normal day’s range.

Around 7:25 AM ET, WTI crude oil was trading at $87.28, up $1.24, or 1.44%. The session range was $85.81–$87.39, with the price near its high.

The Middle East remains central to the outlook. Qatar said it had secured at least two weeks for diplomatic efforts between the US and Iran, though significant differences remain. Iranian officials have also pushed back against reports of negotiations and concessions. The absence of a concrete breakthrough is challenging expectations for a quick agreement, providing a backdrop for today’s rebound.

On Russia and Ukraine, trilateral talks involving the US have concluded, with further updates awaited on whether substantive progress was made. The talks keep diplomacy in focus but do not yet establish a settlement or a change in energy supply. For traders, the distinction is between encouraging diplomatic headlines and an agreement that changes actual supply conditions. Until those align, oil remains vulnerable to abrupt headline-driven moves.

The provided snapshot shows:

• Spot gold: Around $4,042.92, up 0.26%.

• Silver: $52.81, up 2.48%.

• Copper futures: $6.2685, up 0.85%.

• Bitcoin: $73,901, up 0.28%.

Silver has the strongest percentage recovery in that group. Gold’s more modest gain comes with the dollar still firm and yesterday’s Treasury selloff fresh in traders’ minds.

The US cash bond market is closed for Veterans Day, while US equities remain open. The next inflation release on the calendar is US PPI on Friday, November 13, at 8:30 AM ET. After yesterday’s CPI surprise, traders will look for evidence of persistent pipeline price pressures and details that could influence estimates for the Fed’s preferred PCE inflation measure. Today, equity follow-through, currency breaks and geopolitical headlines will help determine whether the morning moves can extend.

EURUSD is trading at 1.1138, seven pips above the session low at 1.1131. Sellers have the stronger hand within today’s range. A move below 1.1131 that can stay below would extend the downside and give sellers more control. A break that quickly fails would be a warning that the sellers had their shot and could not sustain the move. The session high at 1.1170 is the upside reference.

USDJPY is at 159.16, just below the session high at 159.18. The price moved above the 200-day MA at 158.69 yesterday and is now breaking above the 100-day MA at 159.00, trading at the highest level since September 2. The 160.00 level is a broader psychological reference.

GBPUSD is trading at 1.3313, just five pips above its 1.3308 session low. The price is testing a swing area between 1.3298 to 1.3310. Yesterday the price tested the high of that range and found willing sellers. A break below 1.3298 should see more selling momentum. If the level holds again, it adds to its attractiveness as a bounce point.