WTI crude closed above $100 for the first time since May — up 6.7% in a single session. PPI came in right on the number. The market sold off anyway. Four straight losing days. Rate hike odds at 70%. CPI tomorrow morning. The Fed in five days.
The Close
Fourth straight loss. The Dow dropped 317 points — down 0.6% to 52,064. The S&P 500 fell 0.58% to 7,592. The Nasdaq slid 0.65% to 26,083. Only a third of listed stocks advanced. That's the thinnest green I've seen all week.
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| WTI Crude | $102.48 | +6.7% | ||
| S&P 500 | 7,592 | −0.58% | ||
| Rate Hike Odds | 70% | +8 pts | ||
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| Energy |
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+3.5% | ||
| Consumer Staples |
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+0.8% | ||
| Utilities |
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+0.4% | ||
| Health Care |
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+0.2% | ||
| Comm. Services |
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−0.3% | ||
| Financials |
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−0.6% | ||
| Consumer Disc. |
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−0.8% | ||
| Industrials |
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−1.1% | ||
| Real Estate |
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−1.4% | ||
| Materials |
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−1.6% | ||
| Info. Technology |
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−1.8% | ||
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Oil was the story. WTI crude closed at $102.48 — up 6.7% on the day. That's the biggest single-session jump since March. Brent settled at $107.63, up 5.9%. Both are at their highest since May. Since the Iran war began in February, WTI is up 53%. Year to date, it's up 79%.
The morning started with PPI. Headline producer prices rose 0.4% in August, matching the consensus estimate. On a year-over-year basis, the number came in at 5.3% — up from 4.7% the month before. The monthly pace was expected. The annual acceleration was not.
On the losing side, Cooper Companies cratered 14% after slashing guidance and missing revenue. Intel gave back 5.7% as traders took profits from this week's rally. Freeport-McMoRan lost 7.3% as copper prices pulled back. Nvidia fell 2.2%.
On the winning side, Elevance Health rose 4.1% after reaffirming full-year guidance. Uber gained 2.8% after its CEO made a $10 million open-market stock purchase. Apple added 1.6% a day after unveiling the iPhone Duo — its first foldable, priced at $1,999. The market liked it more on the second look. The green was thin and defensive — the few stocks that gained were the ones investors hide in when they don't trust the tape.
The ECB raised rates 25 basis points, as expected. That's the second hike this year. European inflation hit 3.3% in August, with energy running at 14.3%. The ECB now sees inflation averaging 3.0% this year. Europe is tightening into the same oil shock we are.
Existing home sales fell 2% in August to a 3.98 million annual rate. When rates are pushing 7% on a 30-year mortgage, people stop moving.
What The Market Is Pricing In
The PPI matched. The market still sold off. That tells you the selling isn't about today's data. It's about tomorrow's.
Here's why. The PPI you saw this morning measures August wholesale prices. The oil surge that put WTI above $100 happened in September. It's not in the data yet. The market is selling because it knows the next PPI — and the next CPI — will be worse. When oil goes from $91 to $102 in a week, that shows up in gas prices, shipping costs, food packaging, and plastics. It filters through everything with a two- to four-week lag.
There's a phrase for this on Wall Street: the market is front-running the data. It means traders are pricing in a number they haven't seen yet — because they can feel it coming. When gas is $4.50 and diesel is above $5, you don't need to wait for the government report to know where inflation is headed.
Rate hike odds jumped to 70% today, up from 62% before the PPI hit. Five days ago that number was 58%. A week before that it was a coin flip. The market has moved from "maybe" to "probably" to "almost certainly" in the space of ten trading sessions. The CPI number tomorrow morning is the last piece of evidence before the jury reaches its verdict on September 16.
And then there's the political layer. At the Republican National Convention in Dallas last night, the president announced what he called a "Trump dividend" — a direct cash payment to American households, funded by tariff revenue. The details are thin and the price tag almost certainly exceeds what tariffs bring in. But the market heard "more spending" on top of $100 oil and a Fed leaning toward tightening. It's the opposite of what the bond market wanted to hear.
I saw this pattern in 2022. When Russia invaded Ukraine, oil spiked to $130. The PPI readings from February looked manageable — just like today's did. But the oil surge in March made every subsequent print uglier than the last. The Fed went from 25-basis-point hikes to 75 in a matter of weeks. The labor market was strong then too. It gave the Fed room to move aggressively. The same setup is forming now.
What's Next
Three things I'm watching this week:
01 — Oracle and Adobe earnings, tonight after the close
Both report in a few hours. Oracle rose 2.8% on Tuesday but has been fading since — the AI capex question is front and center after Alphabet got punished for spending $15 billion on Wednesday. If Oracle's cloud numbers are strong and it can show revenue flowing from its AI backlog, tech stabilizes. If the call is all capex and no receipts, the selloff in AI infrastructure names gets worse. Adobe is the creative software bellwether — its pricing power tells you whether enterprise customers are still spending.
02 — August CPI, Friday morning
The week's main event. Headline CPI is expected at 3.4% year-over-year, with a 0.4% monthly gain. Core is expected at 2.4%. If core prints above 2.5%, a September 16 rate hike becomes a near-certainty. If it comes in at 2.3% or below, the hike odds pull back. But here's what makes this print tricky: even if August CPI is tame, the market knows September will be worse because of the oil spike. A cool CPI might buy the Fed one meeting — but not two.
03 — Friday's close and the weekend setup
How the market finishes the week matters more than usual. Traders will have CPI in hand by 9 a.m. and the entire session to reposition before the weekend. If CPI is hot and the S&P breaks below 7,500, expect hedge funds to cut risk into the close rather than hold through a weekend with a rate hike looming on Tuesday. If CPI is cool and the tape bounces, watch whether buyers show real conviction or just cover shorts. The Friday close will tell you what the smart money thinks the Fed is about to do.
Oil rewrote the math this week. The data hasn't caught up yet, but the market has. Tomorrow's CPI is the last clean read before the Fed decides. If it's hot, the S&P's four-day losing streak is just the start.
That's it for today. See you tomorrow after the close.
