U.S. stocks rallied Friday, snapping a four-session slide, as investors looked past a hotter-than-expected core inflation reading and a pullback in oil prices. The S&P 500, Dow and Nasdaq Composite all traded higher even as the report lifted the odds of a Federal Reserve rate hike next week.
The Dow Jones Industrial Average traded 500 points higher, or 1%, breaking what had been its longest losing streak since late April. The S&P 500 climbed 0.9%, and the Nasdaq Composite rose 1%, lifting all three benchmarks out of a four-day retreat.
CPI comes in hotter on core inflation
Consumer prices rose 0.4% in August and 3.4% from a year earlier, matching Dow Jones estimates. But core CPI, which strips out food and energy, climbed 0.3% on the month — a tenth of a point hotter than the 0.2% estimate. Traders now see an 86% chance of a quarter-point hike at the Fed's next meeting, up from near 70% before the report, according to the CME FedWatch tool.
According to Reuters, Themis Trading's Joe Saluzzi weighed in on the report: "Those numbers are still stubborn." Fluctuating rate hike expectations have left the market backdrop fragile amid the Middle East conflict and elevated Treasury yields even after the inflation report.
Oil retreats after a supply-driven surge
Crude prices eased, giving back some of the week's sharp gains tied to escalating Middle East tensions. West Texas Intermediate futures dropped 3% to $99.28 a barrel, while Brent slid 3.1% to $104.32. Both benchmarks nevertheless remained on pace for weekly advances of around 8%.
Oracle earnings lift tech sentiment
Oracle shares were on pace for their best day since Aug. 3 after the company posted adjusted earnings of $1.92 a share on revenue of $19.35 billion, beating estimates of $1.74 a share and $19.14 billion. Cloud infrastructure revenue more than doubled to $7.4 billion, topping the $7.09 billion estimate and adding to confidence in the AI trade.
Advancing issues outnumbered decliners by a 4.56-to-1 ratio on the NYSE and by a 3.68-to-1 ratio on the Nasdaq.
Sources: US Top News and Analysis, Investor's Business Daily, Reuters
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