CPI day: yields at 4.94%, oil above $100, chips lead a fourth drop

August consumer prices land at 8:30 a.m. ET, the last major inflation report before the Fed decides on September 16, and traders now put the odds of a quarter-point hike at that meeting above 70%. Stocks fell for a fourth straight session on Thursday as the 10-year Treasury yield rose to 4.94% and chipmakers sold off, while Oracle climbed after hours on its results.

The Fed decision now runs through this morning’s CPI

Thursday was the fourth straight losing session for the major averages. The S&P 500 fell 0.58% to 7,591.70, the Dow Jones Industrial Average lost 316.56 points, or 0.6%, to 52,064.10, and the Nasdaq Composite slid 0.65% to 26,081.72, CNBC reported.

The August Producer Price Index set the tone. Wholesale prices rose 0.4% for the month, in line with forecasts, and 5.4% from a year earlier, a tenth of a point above expectations. Energy did most of the work: the Bureau of Labor Statistics said final-demand energy prices rose 4.2% and diesel fuel jumped 24.1%. Excluding food and energy, core producer prices rose 0.2%, below the 0.3% forecast.

The softer core figure did not calm rate expectations. Before the report, fed funds futures priced about a 65% chance of a quarter-point hike on September 16. Afterward that rose above 70%, according to CME FedWatch figures cited by Reuters and CBS News. The Fed has not raised rates since July 2023.

Bonds sold off with stocks. The 10-year Treasury yield was 4.94% late Thursday, up from 4.83% on Wednesday and its highest since 2023, the Associated Press reported. TLT, the long-bond fund, fell 1.16% to $80.78, and GLD, the gold fund, lost 1.73% to $396.36.

Europe has already moved. The European Central Bank raised rates by a quarter point on Thursday, lifting its deposit rate to 2.5%. It was the bank’s second increase since the Iran war began, with eurozone inflation at 3.3% in August.

Oil set the overnight tone, and energy stocks did not follow

Brent crude, which settled just above $101 on Wednesday, traded above $108 in early Asian hours, its highest since May, before reversing. In the AP’s latest update, Brent was down 2.3% at $105.14 a barrel and US crude was down 2% at $100.46.

Energy shares have not followed crude higher. On Thursday XLE, the energy fund, fell 0.58% to $64.93 and Chevron (CVX) lost 0.49%, while Exxon Mobil (XOM) rose 0.61%. With oil above $100, the sector fund still finished lower.

Asia sold off. Japan’s Nikkei 225 closed down 1.93% at 64,011.34 and South Korea’s Kospi closed down 1.76% at 6,909.92. In the AP’s update, Hong Kong’s Hang Seng was down 0.7% and the Shanghai Composite 1.2%. Chip and AI names led the losses: SoftBank Group fell almost 4%, Samsung Electronics 3.5% and SK Hynix 2.2%. Against that, Chinese AI chipmaker Enflame more than doubled in its Shanghai debut.

In Europe, the STOXX 600 was up 0.3% at 637.60 as of 3:16 a.m. ET, after closing Thursday at a two-month low, and was on course for its worst week since April, Reuters reported. US stock futures were modestly higher: CNBC had S&P 500 futures up 0.19% and Dow futures up 151 points early Friday.

Chipmakers took Thursday’s loss

Our feed shows how broad the selling was: 75 of the 100 stocks and funds we track fell and 25 rose. XLK, the technology fund, fell 1.41% to $185.22, the weakest of the five sector funds in the feed, all of which finished lower. QQQ, the Nasdaq 100 fund, lost 1.06%, and IWM, the small-cap fund, lost 1.01%.

Semiconductors did the most damage. Intel (INTC) fell 5.57% to $100.32, the worst performer in the feed. Micron (MU) closed at $977.41, down 4.90% from $1,027.77. Arm Holdings (ARM) lost 3.80%, AMD 3.36% and Applied Materials (AMAT) 3.17%. We could not confirm a company-specific reason for Intel’s decline.

Nvidia (NVDA) fell 2.37% to $218.36 on 105.5 million shares, the heaviest volume in the feed. Bloomberg reported on Thursday that the Justice Department is investigating whether Nvidia structured its $20 billion licensing deal with AI chip startup Groq to avoid antitrust review.

Not every chip stock fell. Skyworks Solutions rose 9.80% to $84.03, according to our movers feed, after its chief executive said the company’s $22 billion merger with Qorvo is in its final stages and expected to close by year-end. Qorvo rose 6.77%.

The pain also landed somewhere different from Wednesday, when telecom, staples and real estate stocks fell hardest as yields rose. On Thursday, with yields higher still, AT&T rose 1.59%, Verizon (VZ) 0.46% and Procter & Gamble (PG) 0.23%. Real estate and utilities kept falling: American Tower (AMT) lost 1.40%, Prologis (PLD) 0.92% and Duke Energy (DUK) 0.88%.

The few big gainers had their own stories

Apple (AAPL) rose 3.56% to $326.57 on 69.9 million shares, a day after unveiling the iPhone Duo, a $1,999 foldable phone that drew upbeat analyst commentary. Yahoo Finance counted Apple and Alphabet as the only two Magnificent Seven stocks higher on the day, but our feed also has Microsoft (MSFT) up 0.16%, alongside Alphabet (GOOGL) up 0.59%. Meta (META) fell 1.42% and Tesla (TSLA) 1.16%.

Reddit (RDDT) rose 6.08% to $155.34, the best performer in the feed. StockStory attributed the move to Piper Sandler audience data showing Reddit’s user base grew 8% in August from July. MongoDB (MDB) rose 4.32%; we could not confirm a reason.

Oracle and Adobe split after the close

Oracle (ORCL) fell 5.38% to $152.94 in the regular session, then reported fiscal first-quarter results after the bell. Adjusted earnings were $1.92 a share, ahead of the $1.74 analysts expected. Revenue grew almost 30% to $19.35 billion, above the $19.14 billion estimate, and cloud infrastructure revenue more than doubled to $7.4 billion, CNBC reported. For fiscal 2027, Oracle forecast revenue of at least $90 billion.

CNBC reported the stock up 7% in extended trading. The last after-hours price in our feed is $159.26, about 4% above the close. That is a smaller gain, so the size of the move is not settled until the open.

Adobe (ADBE) fell 2.37% to $248.83 before its fiscal third-quarter report. Revenue rose 13% to a record $6.76 billion and adjusted earnings came to $6.13 a share, both above estimates of $6.69 billion and $6.08, SiliconANGLE reported. Adobe raised its full-year revenue forecast, but its fourth-quarter revenue guidance of $6.80 billion to $6.85 billion put the midpoint below the $6.85 billion analysts expected. It also said Anil Chakravarthy will succeed Shantanu Narayen as chief executive on December 1. The last after-hours price in our feed is $242.98, about 2% below the close.

What to watch today

August Consumer Price Index, 8:30 a.m. ET. Economists expect headline prices up 0.4% for the month and core prices up 0.2%. Annual forecasts are 3.3% to 3.4% for headline inflation, depending on the survey, and 2.4% for core, down from 2.5% in July.
Kroger fiscal second-quarter conference call, 8:00 a.m. ET. The consensus is $1.06 a share in earnings on $34.61 billion in revenue.
Oracle and Adobe’s first regular session after their results.
University of Michigan consumer sentiment, preliminary September reading, 10:00 a.m. ET. The August reading was revised to 51.7.
Monthly Treasury Statement for August, scheduled for release today.
FOMC rate decision, Wednesday, September 16.

Not financial advice. iTrading Buddy summarizes publicly available market data and news; every figure above is sourced from the reporting available before the US open on the date shown. Verify anything you act on.