Markets In Focus: The Week That Was and What’s On Tap
THE WEEK THAT WAS
U.S. stocks finished a holiday-shortened week lower. The S&P 500 fell 0.8%, the Nasdaq Composite declined 0.7%, and the Russell 2000 dropped 2.4%. Three down sessions on rising oil and yields were only partly offset by Friday’s bounce.
Producer and consumer prices were the week’s anchors. Thursday’s PPI rose 0.4% in August and 5.4% year over year, with energy up 4.2% and diesel up 24.1%. Friday’s CPI matched forecasts at 0.4% month over month and 3.4% year over year, but core CPI rose 0.3% versus 0.2% expected. That combination pushed odds of a September 16 rate hike into the mid-80s to near 90%. Yields marked multi-month highs midweek before easing into the close.
Crude was the inflation driver. Brent and WTI pressed toward triple digits on continued Strait of Hormuz risk, feeding gasoline in CPI and energy in PPI. Friday oil pulled back a few percent on reports of Gulf–Iran talks over temporary shipping arrangements, enough to take pressure off equities even as hike odds rose.
Oracle earnings supplied an AI infrastructure theme catalyst. After the close Thursday it beat with EPS of $1.92 versus $1.74, revenue up 30% to $19.3 billion, cloud infrastructure up 121% to $7.4 billion, and remaining performance obligations of $664 billion. The stock popped then closed Friday down about 1.8% as investors kept pressing on debt and capex. Hardware names captured the read-through: Dell jumped 12% Friday to a record; HP Enterprises rose about 11%.
The week’s message was narrow. Inflation is still an oil story with a slightly hot core, policy is all but priced for a hike, and AI infrastructure demand was reconfirmed even as Oracle itself did not hold the gain. Small caps absorbed the rate shock. Friday’s rally reduced uncertainty; it did not reverse the weekly loss.
THE WEEK AHEAD
The week of September 14 is all about the Federal Reserve. As mentioned above, August CPI rose 0.4% on the month and 3.4% from a year ago, but core prices climbed 0.3%, a tenth above forecast, pushing futures pricing for a quarter point hike to nearly 90% at the September meeting.
That makes Wednesday the pivotal session. August retail sales arrive at 8:30 AM ET, and the FOMC decision follows at 2:00 PM, with the fed funds rate sitting at 3.50% to 3.75%, where it has held all year. Updated projections and Chair Kevin Warsh’s press conference will shape rate expectations through year end. Thursday brings housing starts, building permits and the Philly Fed survey, while Friday delivers industrial production alongside quarterly options expiration, which could amplify volatility.
Earnings are light, but Lennar reports midweek and should offer a timely read on housing demand with the 10-year Treasury yield closing in on 5%.
Geopolitics remain the wild card. The war with Iran has lifted energy prices, with WTI closing at $102.48 on Thursday, and any escalation or de-escalation will feed directly into inflation expectations and Fed thinking. A widely expected Bank of Japan hike on Friday could also add upward pressure on Treasury yields.
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