A retreat in crude alongside Oracle Corp.'s better-than-expected revenue lifted U.S. stocks, tempering worries about firmer core inflation. By late morning in New York, near 11:45 a.m., the S&P 500 and Nasdaq 100 were each ahead by more than a percentage point. WTI crude slid more than 3% on reports that Gulf countries are considering meeting with Iranian officials regarding the Strait of Hormuz, and the International Energy Agency pared back its demand projections.
Treasury yields eased, with the 10-year retreating after coming close to the closely watched 5% threshold, a level last reached in 2023.
A pickup in core consumer prices led markets to assign about a nine-in-ten chance that the Federal Reserve will raise rates next week, and to fully price in two hikes by the end of the year.
"Now that the September rate hike is a done deal, the market is thinking about what's next," said Wells Fargo strategist Ohsung Kwon. "Oil is a bigger story," he added, with Friday's drop "providing some relief."
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Vital Knowledge founder Adam Crisafulli wrote that while core CPI was a touch firmer month over month, it does not change the bigger picture: inflation remains too high and a hike next week is well justified. He added that such a move "shouldn't hurt equities and could in fact help as a one (or two)-and-done type of mini tightening campaign would bolster monetary independence/credibility without meaningfully burdening the economy."
Oracle's cloud business beat expectations, giving tech a boost. Following a new outperform initiation by RBC Capital Markets, Dell Technologies Inc. rallied, with the call citing robust demand for AI infrastructure. Plans at Microsoft Corp. to expand its data center footprint to more than triple its current size were also taken as a supportive signal.
At the same time, caution around AI is growing. Bridgewater's Co-Chief Investment Officer Greg Jensen - who backed OpenAI and Anthropic PBC at an early stage - issued a warning: "This is what it was like in February 2020," he said, comparing it to the earliest days of the coronavirus pandemic. "Until the AI starts killing people, unfortunately, history would suggest we're not going to do anything."
Today's setup blends easing oil, resilient tech demand, firmer core inflation, and a Fed that markets see as nearly certain to move next week. Watch how crude, longer-term yields near 5%, and AI-fueled spending on data centers ripple through sectors you own.
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