Dow Hovers Near Flat as Nasdaq Rallies on CoreWeave AI Rebound While Rate-Hike Fears Weigh on Blue Chips

NEW YORK — The Dow Jones Industrial Average hovered near the flat line on Wednesday, while the tech-heavy Nasdaq Composite rallied. Strong earnings from AI cloud provider CoreWeave revived the artificial intelligence trade, but concerns about rising interest rates kept blue-chip stocks in check.

The Dow was down 23.09 points, or 0.04%, at 52,208.80 shortly after 10 a.m. Eastern time. The broader S&P 500 rose about 0.9%, and the Nasdaq Composite gained about 1.5%. The small-cap Russell 2000 slipped at the open.

The split reflected a sharp rotation into technology and growth stocks. CoreWeave shares soared nearly 20% after the company reported third-quarter revenue up 168% to $3.66 billion, raised its full-year outlook and disclosed a $132.5 billion backlog. The results eased fears of a slowdown in AI spending and lifted chipmakers, memory makers and data center suppliers.

Nvidia rebounded about 3% after two straight days of losses tied to an investigation into CEO Jensen Huang. Broadcom, Micron, Sandisk and Seagate also rose sharply.

The Dow, which includes fewer high-growth tech companies and more industrial and financial stocks, lagged as investors weighed the prospect of higher borrowing costs.

On Tuesday, stocks fell after the October consumer price index showed inflation rising more than expected. The Dow lost 157.86 points, or 0.30%, to close at 52,231.89. The S&P 500 fell 0.38% to 7,520.93, and the Nasdaq dropped 0.74% to 25,065.87.

The inflation data sent Treasury yields surging. The 10-year yield briefly topped 5% before closing Tuesday at 4.98%. Federal Reserve Governor Michelle Bowman said inflation is broadening and that rate hikes may be needed. Traders have increased bets that the Fed will raise rates in December and possibly again early next year.

The U.S. bond market is closed Wednesday for Veterans Day, while stock markets are trading normal hours. That means there is no fresh reading from the Treasury market. The next major test comes Thursday, when the Treasury holds a $25 billion auction of 30-year bonds.

Higher rates tend to weigh on stock valuations, particularly for companies whose profits are expected far in the future. However, investors on Wednesday appeared willing to look past the rate outlook in favor of signs of continued AI demand.

Some strategists remain cautious. Bank of America has warned that the S&P 500 has become one of the most crowded trades in the market, and some analysts say a rally could be limited if interest rates keep rising.

The S&P 500 is up about 9.5% so far this year, ahead of the Dow's 8.5% gain and the Nasdaq's 7.5% rise.

Investors are looking ahead to Nvidia's third-quarter earnings report on Nov. 17, which is expected to be a key test for the AI trade. Nebius, another AI cloud provider, reports results Thursday.