September 10th, 2025
Stocks Open Higher as Producer Price Inflation Cools – Tech and Energy Lead Gains
Equity markets are up in early trading Wednesday after August producer price inflation came in lower than expected. Technology and energy sectors are driving the rally, while consumer discretionary and staples lag.
Overseas, major Asian indexes in Japan, Hong Kong, and Korea hit record highs, while the U.S. dollar weakens against major currencies.
The S&P 500 climbed 0.2% while the Nasdaq Composite fell 0.1% on the heels of record closing highs. The Dow Jones Industrial Average, which includes fewer tech stocks, fell 0.6%.
Economic Takeaways:
- Bond yields have fallen, with the 10-year U.S. Treasury yield at 4.06%.
- WTI crude oil is trading higher amid rising geopolitical risks following Israel’s attack on Hamas leadership in Qatar.
- The Producer Price Index (PPI) rose 2.6% year-over-year in August, well below forecasts of 3.3%. Trade services inflation, down 1.7% month-over-month, played a major role, likely reflecting narrower margins for wholesalers and retailers. Core PPI, excluding volatile food and energy prices, eased to 2.8% year-over-year, below expectations of 3.5%.
- The Bureau of Labor Statisticscut 911,000 jobs in its preliminary revision to employment data for the 12 months ending last March.
- Chances of a 25-basis point rate cut are 90%, with 10% odds of a 50-basis point cut, according to the CME FedWatch Tool, ahead of next week’s Federal Reserve meeting.
- Fed governor Lisa Cook is likely to take part in that Fed rate decision next week, after a judge blocked President Trump from removing her amid allegations of mortgage fraud.
- Weekly U.S. mortgage applications increased 9.2% last week, following a 1.2% decline the previous week, according to the MBA Mortgage Applications Index.
- Looking ahead, the European Central Bank (ECB) is expected to keep rates steady when it announces its decision Thursday morning before U.S. markets open, according to a Reuters survey.
- On the trade front, Trump has urged the EU to join the US in imposing new 100% tariffs on India and China, media reports said.
Oracle Cloud Backlog Surprises Wall Street, Stock Soars on AI Optimism
Oracle (ORCL) stunned investors with a massive cloud backlog, sending shares up more than 40% Wednesday and boosting chairman Larry Ellison past Elon Musk as the world’s richest person. The company reported remaining performance obligations (RPO) of $455 billion, up roughly 360% from last quarter, underpinning projections that Oracle Cloud Infrastructure (OCI) will grow 77% to $18 billion this fiscal year and could reach $144 billion by 2030.
CEO Safra Catz highlighted four multibillion-dollar contracts with major AI players, including OpenAI, Meta, Nvidia, and AMD, though earnings and revenue slightly missed Wall Street estimates. Oracle also raised capital spending to $35 billion to expand AI-focused data centers, lifting Nvidia and AMD shares as well.
Analysts praised the results, with William Blair calling the backlog “astonishing” and Jefferies noting growing AI optimism. JPMorgan and Bank of America upgraded their outlooks, though questions remain about customer concentration and long-term AI cloud profitability. Oracle’s shares are now up 105% for the year, pushing its market cap past $950 billion and reaffirming its central role in the AI infrastructure market.
Larry Ellison has overtaken Elon Musk to become the world’s richest person after Oracle’s shares surged by more than a third on Wednesday.
Trump Repeats “No Inflation” Claims Despite Public Concern Over Rising Prices
In recent weeks, a striking contrast has emerged between public opinion and President Donald Trump’s messaging on the economy. Polls consistently show that Americans view inflation as their top concern regarding Trump’s economic record, yet the president continues to insist that inflation is a problem of the past.
A new Yahoo News/YouGov survey this week highlighted the disconnect. When asked about Trump and the cost of living, respondents gave the president a dismal 28% approval rating—mirroring results from prior polling that suggest inflation remains his most significant economic vulnerability.
Despite these perceptions, Trump doubled down on his message in a radio interview with WABC, claiming, “We have no inflation. Prices are down on just about everything.” His statement contradicts both public sentiment and economic data, as inflation continues to run above the Federal Reserve’s 2% target.
Trump and some inflation watchers did, however, receive a brief boost from fresh data this week. Supply chain prices unexpectedly fell 0.1% in August compared with July, although year-over-year figures still showed a 2.6% increase. This was far below economists’ expectations of a 3.3% rise. In response, Trump tweeted emphatically, “Just out: No Inflation!!!” while once again calling on Federal Reserve Chair Jerome Powell to lower interest rates.
The episode underscores a persistent tension in Trump’s economic messaging: while Americans cite rising prices as a pressing concern, the president continues to frame inflation as a non-issue, appealing to his base even as broader economic realities suggest otherwise.
Major Banks Lift S&P 500 Targets on Resilient Earnings and AI Investment Surge
Strategists at Wells Fargo, Barclays, and Deutsche Bank all raised their S&P 500 (^GSPC) targets this week, citing robust corporate earnings and the ongoing surge in AI-related investments as key drivers supporting the market’s next leg higher.
Deutsche Bank led the upgrades, increasing its 2025 forecast for the index to 7,000 from 6,550. Chief equity strategist Binky Chadha highlighted the potential for the rally to expand beyond mega-cap technology stocks into more cyclical sectors, noting that the market may experience a digestion period following the recent capital expenditure boom.
Wells Fargo, which had previously projected the S&P 500 to finish 2025 in the 6,300–6,500 range, now expects the benchmark index to reach 6,650 this year and sees further upside to 7,200 by the end of 2026. Barclays also lifted its 2025 outlook, raising the target to 6,450 from 6,050, reflecting growing confidence in sustained earnings resilience and continued investor enthusiasm around AI-driven growth.
On the Move
- Shares of Oracle (ORCL) soared 40% despite missing analysts’ consensus on earnings and revenue in its earnings report late Tuesday.
- Palantir (PLTR) gained 2% this morning, fueled in part by two recent analyst notes highlighting the company’s growth potential.
- Chewy (CHWY) fell 8% despite meeting analysts’ average earnings and revenue estimates. Investors appeared disappointed as profits declined year-over-year, driven by a $79.1 million expense related to share-based compensation and taxes, according to The Wall Street Journal.
- GameStop (GME) surged 9.3% ahead of the open after reporting results above analysts’ expectations. Conversely, Synopsys (SNPS) tumbled 23% after missing earnings and revenue estimates, with mixed guidance adding to investor concerns.
- Apple (AAPL) dropped 1.5% yesterday and another 0.5% this morning following the unveiling of its iPhone 17, iPhone Air, and Apple Watch Series 11. The iPhone Air was highlighted as the thinnest iPhone ever, while the iPhone 17 incorporates more in-house components like the A19 Pro chip and retains the $799 price. Analysts will be watching closely to see if current iPhone owners are motivated to upgrade.
- Potbelly (PBPB) stock surged on Wednesday after the restaurant chain announced it would be acquired RaceTrac, a gas station and convenience store chain, for $566 million in an all-cash deal expected to close in the fourth quarter.
- Klarna priced its IPO at $40 per share, the company said Tuesday, marking an increase from its previous pricing estimate of $35-$37 per share and signaling strong demand for the stock.
What’s Ahead
The Consumer Price Index (CPI) for August is due out tomorrow and is projected to rise to 2.9% annualized from 2.7%, with core CPI holding at 3.1%. Tariffs may contribute to near-term price hikes, though they are unlikely to drive sustained inflation.
Bond markets price in 10-year inflation around 2.36%, indicating long-term expectations remain well anchored.
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