The Inflation Nightmare Will Hit the Stock Market—Sooner or Later

Today’s inflation report may be the main event for markets at the end of a tough week—but there are warning signs everywhere.

Consumer price index data for August will dictate the Federal Reserve’s rate call next week, but data in the here and now may have bigger ramifications. Diesel prices are at $6 a gallon for the first time in history, while oil was trading around $104 a barrel, up 15% so far this month.

The question may no longer be whether the Fed will hike, but when and how many times. The odds of rates staying unchanged through the end of the year sit at just 7%, per the CME FedWatch tool.

Higher interest rates won’t be great for high-valuation tech stocks. Though, interestingly the chip sector has been enjoying a fresh rally. In contrast, software’s rebound has stalled and earnings from two of the sector’s most beaten-down stocks— Oracle and Adobe —haven’t done enough to shift the narrative.

On the 25th anniversary of the Sept. 11 terrorist attacks, we remember all those who lost their lives and the countless families and loved ones affected.

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📈 Here’s what’s happening in markets today:

• Stock futures are rebounding at the end of a negative week.
• Today’s CPI inflation report is high stakes for the Fed.
• Oracle, Adobe, Copart, and more stocks that explain today’s market.
• Diesel prices soar to $6 for the first time.
• Why Oracle stock is so much more than an OpenAI proxy.
• Micron stock rises as this key number from Oracle boosts AI trade.
• Kroger stock falls. Why the grocer is cutting sales guidance.
• Tesla’s electric Semi could win from high diesel prices.
• Reflecting on 9/11: “We witnessed some of the very best humanity has to offer.”

Created with Highcharts 9.0.1Source: FactSetNote: futures contractsAs of Sept. 11, 9 a.m. ET

Created with Highcharts 9.0.1Nasdaq S&P 500Dow industrialsSept. 10Sept. 11-0.50-0.2500.250.500.751.001.251.50%

🏛️ ECB’s move sets up week of central bank rate decisions

Four of the world’s biggest central banks are primed to either boost their key lending rates, or signal tighter policy ahead, over the next week, with the ECB starting with a quarter-point rate hike on Thursday. The CME’s FedWatch tool pegs the probability of a Fed rate hike at more than 70%, high enough to suggest markets have come to an early decision.

👁️ Oracle beats expectations as cloud sales soar

Oracle beat expectations for top and bottom-line results, but the most important number in the quarter was revenue from its cloud infrastructure segment, which rents out AI servers over the internet. This unit represents the lion’s share of Oracle’s $664 billion backlog. Cloud infrastructure sales rose 121% from last year to $7.4 billion.

🧠 IBM and Lockheed expand quantum work in Europe

IBM and Lockheed Martin are building a quantum innovation hub in Switzerland with the goal of developing new algorithms and industrial applications. The agreement deploys an IBM Quantum System Two, its latest generation quantum computer, to be accessible to academics, researchers, and enterprises.

🎓 California’s distaste for hedge funds created this ETF

A new exchange-traded fund, seeded with $2.5 billion from the University of California, is not only the largest U.S. ETF debut ever—it’s taking a starkly different approach. Unlike its higher education peers, California avoids hedge funds in its $29.5 billion endowments portfolio, which makes up a chunk of its overall $236 billion in investments.

💰 What Trump’s election dividend would do to inflation

President Donald Trump’s promise to pay every American adult $5,000 if Republicans win the midterm elections not only has daunting political challenges, but economic ones, too —as much as $1.4 trillion added to the national debt and quite possibly a spike in inflation, according to forecasts from budget modeler Kent Smetters.

🧳 Plunging retail and travel stocks could signal trouble

Many consumer and travel-oriented stocks have been hit hard over the past month, including TJX , Carnival, American Airlines, and Booking Holdings, and that could signal a weakening economy. Investors are worried that higher gasoline prices, now averaging over $4 a gallon, and increased food and other costs are crimping consumers.

📰 Don’t miss out on our other newsletters

• Review & Preview: Inflation Watch
• Global Signals: Bank of Japan Is in the Middle of a Generational Shift
• Barron’s Tech: Oracle Gets Back in the Game With Astra

🏦 More lenders could see fewer exams under new rule

The three main U.S. federal banking regulators issued an interim final rule that would allow more banks to qualify for fewer exams of their businesses, the latest in a series of victories that bank lobbying groups have notched under the Trump administration. Read more here.

💬 Quote of the day:

We are delivering data center and GPU capacity at a pace that would have seemed impossible only a year ago. — Clay Magouyrk, Oracle co-CEO

Other headlines moving markets:

• Uber Technologies CEO buys $10 million shares.
• India’s economy is booming. The stocks missed the memo.
• Why Wall Street is buying Navan’s post-earnings stock.
• Adobe posts strong earnings after CEO switch.
• Winners and losers of Trump’s Canada imports ban.
• SpaceX sends classified launch for Space Force.
• Nonprofit sues the Fed, claiming ‘corruption.’
• The iPhone Duo is a Gen Z dream, even at $2,000.
• Vanguard’s 4 myths about women investors.
• Revolution Medicines cancer drug. Wall Street wants more.
• Meta’s consumer AI agent is good for Shopify’s stock.
• Barron’s got Cooper wrong, but the stock now looks cheap.
• Biohaven’s epilepsy drug trial roadblock is only the latest blow.
• Why Baker Hughes’ stock had its worst day in over a year.
• Hotel REIT Braemar faces proxy fight.
• Freight companies face soaring diesel fuel costs.
• Growth without AI: 8 stock picks.
• The new chip rally comes with a warning attached.
• Europe is stronger than investors think. What to own now.
• Cracker Barrel stock doubled this year. It’s time to ask for the check.
• Atlanta Braves stock looks cheap amid booming pro sports team values.
• AI doomers can’t stop dooming. It’s time to listen.

I want to hear from you! If you’ve got a great story for us, get in touch! You can email me at thebarronsdaily@barrons.com

— Edited by Liz Moyer, Stacy Ozol, and Patrick O’Donnell

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