Stock markets rose on Wednesday on renewed optimism over AI following strong results from data centre operator CoreWeave, while the dollar extended a rally on expectations for at least one more Federal Reserve interest rate hike.

Wall Street's main indices enjoyed a buoyant session led by the tech-heavy Nasdaq, which finished up 1.6 percent.

"The primary catalyst for the upside action is, ironically, one of the primary catalysts for the downside action that had been seen in the AI trade," said Briefing.com analyst Patrick O'Hare.

"That would be CoreWeave, which posted better-than-feared third-quarter results and issued a reassuring outlook that has quieted some of the debt financing concerns surrounding its AI buildout plans," he added.

CoreWeave said sales would come in at US$13-US$13.3 billion this year, beating estimates and soothing worries about its ability to finance its heavy debt burden, which fuelled a sharp sell-off last month.

Shares in CoreWeave surged nearly 25 percent.

"This relief trade is carrying across the AI trade complex to include hardware, software, and semiconductor stocks," said O'Hare.

The gains in US equities came despite signalling from US central bankers that the Fed will lift interest rates in December to address persistent inflation. The US dollar rose to its highest level since May 2025 after one top Fed official floated the idea of a 0.5 percentage point interest rate increase next month.

After last week's rout fuelled by fears that Democrats would ramp up regulation of AI, tech stocks have bounced this week on bargain-buying and hopes that fears may have been overdone.

"Overall, the market is putting AI doubts to one side and is focusing on revenue potential and mega cap IPO as we move through this week," said Kathleen Brooks, research director at XTB.

Semiconductor companies advanced, including scandal-plagued Nvidia, which bounced 3 percent after a two-day rout following the bombshell revelation of an affair between CEO Jensen Huang and a woman suspected of being a spy. The firm is now the subject of an FBI investigation.

The Dow Jones Industrial Average rose 254 points, or 0.5 percent, to 52,486, the S&P 500 gained 98 points, or 1.3 percent, to 7,619 and the Nasdaq Composite gained 400 points, or 1.6percent, to 25,466.

Oil prices advanced after sinking on Tuesday on hopes for a US-Iran agreement to end their war and reopen the crucial Strait of Hormuz. (AFP)



Edited by Cecil Wong