The S&P 500 Index ($SPX) (SPY) on Friday rose by +0.86%, the Dow Jones Industrial Average ($DOWI) (DIA) rose by +0.98%, and the Nasdaq 100 Index ($IUXX) (QQQ) rose by +0.91%. E-mini S&P futures (ESU26) rose +0.83%, and September E-mini Nasdaq futures (NQU26) rose +0.86%.
Stock indexes closed higher, supported by Friday’s -2.4% decline in oil prices. The stock market took Friday’s CPI report largely in stride, even as the 10-year T-note yield closed slightly higher and the odds of a Fed rate hike next week rose to 85%.
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Friday’s Aug US CPI report of +0.4% m/m was in line with market expectations, but the core CPI report of +0.3% m/m was slightly stronger than market expectations of +0.2% m/m. On a year-on-year basis, the Aug CPI report of +3.4% y/y was unchanged from July and was in line with market expectations. Meanwhile, the Aug core CPI report of +2.4% y/y eased slightly from July’s +2.5% and posted a new 5.5-year low, and was in line with market expectations.
Friday’s CPI report caused the markets to raise the odds for a +25 bp FOMC rate hike at next week’s meeting on September 15-16 to 88% from 75% on Thursday.
Stocks were undercut by Friday’s weaker-than-expected US consumer sentiment report. The University of Michigan’s preliminary Sep US consumer sentiment index fell by -3.9 points to 47.8, weaker than market expectations for a -0.6 point decline to 51.3.
Also on the negative side, the University of Michigan reported that Sep US consumer 1-year inflation expectations rose to +4.6% from +4.0% in August, stronger than expectations of +4.2%. Sep consumer 5-10 year inflation expectations rose to +3.4% from +3.3% in August, and were stronger than market expectations of +3.3%.
The US-Canada trade war continues to weigh on stock market sentiment. On Tuesday, Canada imposed tariffs of 15% to 50% on hundreds of US goods in retaliation for the US action last month to impose 50% tariffs on $20 billion of imports from Canada. The US responded by blocking imports of some Canadian products and slapping new tariffs on others, and by seeking to bar Canadian companies from selling to US government contractors.
Oct WTI crude oil prices (CLV26) fell -2.4% on Friday, reversing part of Thursday’s +6.7% surge to a 3.5-month high. Oil prices still rose by a net +9% on the week, but fell on Friday after the International Energy Agency warned that high oil prices and restricted oil supply will cause the biggest drop in global oil demand this year since the Covid-19 pandemic.
There were reports that two ships were struck by unidentified projectiles near Oman on Thursday, presumably by Iran. Also, Axios reported that Saudi Crown Prince Mohammed bin Salman called President Trump twice on Thursday, asking him to launch a new military attack against the Houthis in Yemen, who are gaining control of more territory in Yemen near the critical Bab el-Mandeb Strait and have been striking Saudi oil facilities. Saudi Arabia told OPEC on Thursday that its crude production in August fell to 6.238 million bpd, the lowest since 1990.
Overseas stock markets closed mixed on Friday. The Euro Stoxx 50 closed up +0.90%. China’s Shanghai Composite closed down -1.18%. Japan’s Nikkei-225 Stock Average closed down -1.91%.
Interest Rates
December 10-year T-notes (ZNZ6) fell by -7 ticks. The 10-year T-note yield rose +0.6 bp to 4.969%, following Thursday’s +11 bp surge to a 2.75-year high of 4.963%. T-note prices found support early in the session from lower oil prices but eventually succumbed to the hawkish CPI report and the higher odds of an FOMC rate hike next week. T-note prices had some underlying support as the 10-year breakeven inflation expectations rate fell -4.4 bp to 2.373%, down from Thursday’s 3.25-month high of 2.42%.
European government bond yields were mixed. The 10-year German bund yield today posted a new 24-year high of 3.532% and ended the day up +0.3 bp to 3.504%. The 10-year UK gilt yield edged to a 19-year high of 5.380% but ended the day down -3.1 bp to 5.343%.
Markets are discounting a 78% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29. The ECB at this week’s meeting raised its deposit facility rate by 25 bp to 2.50%, as expected, and said inflation will stay above 2% for an “extended period.”
US Stock Movers
Oracle (ORCL) rallied +5% in Thursday’s overnight session on positive cloud news but then lost those gains and ended Friday down -1.7%. Oracle said late Thursday that its cloud infrastructure sales rose +121% to $7.4 billion, above the market consensus of $7.2 billion. Oracle’s co-CEO Clay Magouyrk said, “We are delivering data center and GPU capacity at a pace that would have seemed impossible only a year ago.” The company also said it sold more than $30 billion in AI cloud contracts during the latest quarter, higher than expectations. Fiscal-Q1 sales rose +30% and the adjusted EPS report of $1.92 per share was higher than market expectations of $1.75.
Chipmakers rose nearly across the board on Friday, and the iShares Semiconductor ETF (SOXX) rallied +1.75% on the day. ON Semiconductor (ON) rallied more than +8%. Analog Devices (ADI), NXP Semiconductors (NXPI), Arm Holdings (ARM), and Marvell (MRVL) all rallied more than +4%.
The Magnificent Seven all closed higher on Friday except for Nvidia (NVDA), which showed a small loss. Amazon.com, Alphabet (GOOGL), and Apple (AAPL) all rallied by more than +1%. Apple found continued support after releasing its new iPhone Duo earlier this week, its first foldable phone.
Microsoft (MSFT) rallied +0.65% after saying it plans a data center push to triple its computing power since a current shortage is forcing it to turn away new AI and cloud business.
Crypto stocks traded higher on Friday, supported by a +3.1% gain in Ethereum (^ETHUSD) and a +0.2% gain in Bitcoin (^BTCUSD). Mara Holdings (MARA) rallied more than +4%, Riot Platforms rallied more than +2%, and Strategy (MSTR)and Coinbase (COIN) rallied more than 1%.
Adobe (ADBE) closed up +1.4% despite slightly disappointing guidance, fueling concerns that AI will cannibalize software revenue.
Dell Technologies (DELL) rallied nearly +12% after RBC Capital Markets started research coverage with an outperform rating and $640 price target based on expectations for strong AI infrastructure demand.
Earnings Reports (9/14/2026)
Liberty Live Holdings (LLYVK).
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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