US equity markets advanced sharply on Wednesday, with the S&P 500 and Nasdaq Composite gaining 0.3% and 0.6%, respectively, after a double dose of bullish catalysts: softer inflation data and a blockbuster forecast from chip equipment giant ASML. The rally, driven by renewed risk appetite, is likely to offer a tailwind to cryptocurrency markets, which often move in tandem with tech-heavy indices.
The June Consumer Price Index, released Tuesday, showed the largest single-month decline since April 2020, with headline CPI falling to 3.5% against expectations of 3.8%. Core inflation also cooled, dropping to 2.6%. The producer price index on Wednesday reinforced the disinflationary trend, with wholesale prices easing faster than anticipated. Together, the reports pushed traders to trim bets on near-term rate hikes from the Federal Reserve, boosting risk assets.
Fed Chair Kevin Warsh, in his second day of Senate testimony, reiterated the central bank's intolerance for elevated inflation but the data offered breathing room. Meanwhile, ASML’s raised annual sales forecast—now above Wall Street estimates—underscored robust AI-related demand and plans to expand chipmaking equipment capacity by 30%. The news eased supply-chain bottleneck fears and reignited enthusiasm for the AI trade.
Earnings season continued with mixed results: Morgan Stanley, BlackRock, and Johnson & Johnson reported before the bell, while IBM's 25% plunge after weak preliminary numbers served as a stark reminder that stock selection is critical. UBS strategists noted that the market has shifted from macro-driven to micro-driven, rewarding companies that beat and raise guidance.
With volatility low and tech stocks rotating back into favor, the positive macro backdrop and AI-fueled earnings strength could extend a risk-on sentiment into crypto markets. No specific coins were directly impacted by these equity moves, but the broader correlation between stocks and digital assets may see Bitcoin and major altcoins benefit from improved investor confidence.
