Wall Street's three major indexes closed in negative territory on Wednesday, with the latest inflation reading showing the Federal Reserve's preferred gauge remained well above its 2% target for the 65th consecutive month. The Commerce Department's Bureau of Economic Analysis reported that the July PCE price index rose 3.7% year-over-year, unchanged from June and slightly above the 3.6% analysts had anticipated.

Following the closing bell, Nvidia Corp (NASDAQ: NVDA) released its quarterly results, with shares initially slipping in after-hours trading before climbing over 4% when the chief financial officer projected revenue growth of approximately 70% for fiscal 2028.

US Market Snapshot

The Dow Jones Industrial Average dropped 112.81 points, or 0.21%, to close at 53,464.59. The S&P 500 edged down 1.46 points, or 0.02%, finishing at 7,675.82, while the Nasdaq Composite fell 21.10 points, or 0.08%, to end at 26,130.20. Tesla Inc (NASDAQ: TSLA) declined 1%, Oracle Corp (NYSE: ORCL) advanced 2.8%, Nvidia slipped more than 1%, and SK Hynix (KS: SKHY) dropped nearly 1%. The Nasdaq Golden Dragon China Index closed 0.6% lower.

European Markets

Germany's DAX 30 gained 11.53 points, or 0.04%, to 26,296.59. The UK's FTSE 100 slipped 7.12 points, or 0.07%, to 10,879.04. France's CAC 40 rose 23.19 points, or 0.27%, to 8,462.39. The Euro Stoxx 50 advanced 15.42 points, or 0.24%, to 6,471.05. Spain's IBEX 35 added 7.27 points, or 0.04%, to 20,063.87, and Italy's FTSE MIB climbed 175.69 points, or 0.33%, to 52,896.00.

Asian Equities

Japan's Nikkei 225 gained 0.62%, while South Korea's KOSPI index advanced 0.97%.

Currency and Commodity Markets

The US dollar index, which measures the greenback against six major currencies, rose 0.25% to settle at 99.165. At the New York close, the euro traded at $1.1651, down from $1.1674 in the prior session, while the pound slipped to $1.3592 from $1.3646. The dollar strengthened to 159.40 yen from 159.22, to 0.8055 Swiss francs from 0.8020, to 1.3878 Canadian dollars from 1.3830, and to 9.5329 Swedish kronor from 9.4659.

Bitcoin slipped 0.57% to $78,440, while Ethereum gained 0.84% to $2,475. West Texas Intermediate crude for October delivery fell 13 cents, or 0.16%, to $82.23 per barrel on the New York Mercantile Exchange. Brent crude for October delivery dropped 74 cents, or 0.84%, to $87.84 per barrel. Spot gold declined 1.39% to $4,594.12 per ounce, and spot silver stood at $68.129.

Key Macro Developments

The Fed's preferred inflation gauge showed price pressures ticked higher in July, remaining above the central bank's desired target range. The Commerce Department reported that the PCE price index rose 0.2% month-over-month in July, following a 0.1% decline in June. Excluding volatile food and energy categories, core PCE prices also increased 0.2% for the month. PCE readings typically align closely with market forecasts, as economists can use components from the CPI and PPI released earlier in the month to predict the data with high accuracy. Some economists have cautioned that certain PPI components, driven by rising portfolio management service fees, could push core PCE higher. The Bureau of Economic Analysis is preparing to adopt new statistical methods for these components, which are expected to be implemented next month and could alleviate upward pressure on core PCE.

The White House is planning to announce a new round of "most-favored-nation" drug pricing agreements with several mid-sized biotech companies on Monday, according to sources familiar with the matter. Under the agreements, participating companies would provide outpatient drug discounts to state Medicaid programs, aligning state payment prices with overseas rates, with states given the option to participate. In exchange, companies would be exempt from pilot programs requiring similar discounts under Medicare, with some negotiations also involving tariff relief. The specific drugmakers involved and the actual scale of savings remain unclear. The administration has already reached similar agreements with 17 major pharmaceutical companies, including Pfizer and Eli Lilly, since last year. Researchers estimate that if the Medicaid pricing mechanism covers 82 high-cost brand-name drugs, states could save more than $8 billion annually.

The US economy maintained its growth pace in the second quarter, with GDP expanding at an annualized rate of 1.5%, unchanged from the initial estimate. However, the revised data revealed stronger consumer spending and business investment than originally reported. The Bureau of Economic Analysis' second estimate showed inflation-adjusted GDP grew at a 1.5% annualized pace, down from 2.1% in the first quarter. Consumer spending, which accounts for more than two-thirds of economic activity, rose at a 3.4% annualized rate in Q2, up from the initial 3.2% estimate. Nonresidential fixed investment grew at an 8.5% annualized rate. A narrower measure of underlying demand—final sales to private domestic purchasers—was revised up to 4.2% growth for Q2, marking the strongest increase in over three years, up from the initial 3.9% estimate. This metric excludes net exports, inventories, and government spending. Government spending declined at a 1% annualized rate in Q2, reflecting a significant reduction in non-defense-related expenditures.

Company Highlights

Nvidia's latest sales forecast disappointed some investors in after-hours trading, intensifying concerns about the momentum of AI-related spending. The company projected third-quarter revenue of approximately $108 billion, plus or minus 2%. While this exceeds the average analyst estimate of $105.2 billion, some forecasts had topped $110 billion. Shares initially fell about 2% following the announcement. The muted reaction underscores growing skepticism about the AI boom, with some investors worried about a potential bubble after years of explosive growth. Additionally, Nvidia's extensive investment agreements with numerous AI companies have raised concerns that circular trading could destabilize the entire sector.

Salesforce Inc (NYSE: CRM) surged 12% in after-hours trading Wednesday after the cloud software company reported results and guidance that beat Wall Street expectations. The company posted second-quarter revenue of $11.35 billion, slightly above consensus, with net income reaching $3.53 billion, an 87% increase year-over-year. Salesforce attributed a $2.6 billion strategic gain to its investment in AI startup Anthropic. For the third quarter, the company expects adjusted earnings per share between $3.42 and $3.44 on revenue of $11.42 to $11.5 billion. Analysts had anticipated adjusted EPS of $3.38 and revenue of $11.41 billion. Salesforce now projects full-year EPS of $16.67 to $16.71 on revenue of $46.1 to $46.4 billion, implying approximately 11% growth at the midpoint.

Apple Inc (NASDAQ: AAPL) will host its largest product launch of the year on September 9 at 10 a.m. Pacific Time (1 a.m. Beijing time the following day) at its Cupertino headquarters, marking the first major product event led by CEO John Ternus. The company is expected to unveil its first foldable iPhone, approximately the size of a standard passport that expands to a screen comparable to a small iPad—the most significant design change in the iPhone's nearly two-decade history. Apple also plans to release the iPhone 18 Pro and Pro Max with faster chips, improved battery life, and substantially upgraded cameras, with at least the larger model featuring a mechanical aperture. The second-generation iPhone Air and standard iPhone 18 are reportedly delayed until next spring. A new Apple Watch may also debut alongside the phones. Former CEO Tim Cook will remain as executive chairman.

Alphabet Inc (NASDAQ: GOOGL, GOOG) is reportedly planning to transfer its approximately 90-person AI responsibility team out of DeepMind into its global affairs division, which handles lobbying and public policy, as part of a broader integration of DeepMind into Google's operations. Human resources and policy teams will also be moved out of DeepMind. The AI responsibility team focuses on frontier AI risks, including testing models for chemical, biological, radiological, and nuclear threats, as well as researching the psychological effects of user interactions with AI and chatbots. Some employees worry that moving away from DeepMind will distance the team from Gemini model developers, potentially weakening independent research and the ability to identify frontier model risks. Google stated the team will retain access to DeepMind resources, including compute and personnel, while other teams responsible for model behavior, privacy, and safety will remain within DeepMind. The restructuring comes amid ongoing management and talent changes at DeepMind.

Meta Platforms Inc (NASDAQ: META) has agreed to a landmark settlement with US states worth up to $16.7 billion, resolving allegations that Facebook and Instagram were designed to harm children by fostering addiction. The agreement has been compared to the tobacco industry settlement of the 1990s and could fundamentally reshape the social media industry and how young Americans use these platforms. Meta will provide compensation to states for various public health purposes, including crisis intervention services, after-school programs, outdoor activities, and youth mental health initiatives. The company also agreed to limit users under 18 to two hours of daily use on Facebook and Instagram, prohibit access between midnight and 6 a.m., and restrict notifications during school hours. Teenagers will have the option to use chronological feeds instead of algorithm-recommended content, and parents can set this as the default. Children will also be unable to see like counts and other engagement metrics on posts.