September 11th Market Overview

Happy Friday

25 years since September 11, and ceremonies ran in lower Manhattan, Washington and Shanksville this morning.

Inflation numbers came in a little hot, which all but locks in a Fed rate hike Wednesday. Stocks rose anyway, because traders will take higher rates over not knowing, and oil finally cooled off after a brutal week.

Let’s dig in...

Today's Big Picture

1. Inflation Puts The Fed Back In Play

Headline CPI landed in line. Core monthly prices did not, running a tick above forecast, and that one number did the damage. Traders went from a coin flip a week ago to near certainty on a quarter point hike Wednesday. It would be the Fed's first increase in three years.

2. Oil Eases While Saudi Supply Gets Worse

crude slipped back under $100 after Iran agreed to meet Gulf states in Oman on Monday about the Strait of Hormuz. Then Saudi Arabia shut its East-West crude pipeline after attacks in the Riyadh and Madinah regions injured several people. Saudi output was already down to about 6 million barrels a day, its lowest in three decades and off from more than 10 million before the war. Diesel crossed $6 a gallon for the first time ever, and that cost lands on everything that moves by truck.

3. A Broad Rally And A Grumpy Consumer

Advancers beat decliners at the New York Stock Exchange 1,701 to 924, so this was not a megacap-only bounce. Consumers see a different economy. Michigan's early September sentiment reading came in at 47.8, down from 51.7, and gas prices are doing most of that damage. Corporate profits still took the biggest share of national income since the government started tracking it in 1947. Both things are true at once.

Market Overview

Index Performance

Stock spotlight

Oracle $ORCL ( ▼ 1.77% )  
beat on earnings and revenue, with cloud infrastructure sales more than doubling to $7.4 billion and 850 megawatts of new data center capacity in the quarter. Shares opened sharply higher and finished red. When a quarter that good can't hold a bid, the market is telling you what it thinks about all the money going out the door to build that capacity.

Dell Technologies $DELL ( ▲ 10.07% )  
picked up new outperform coverage from RBC, which called it a primary beneficiary of AI infrastructure spending. That would be its sixth gain in seven sessions.

Hewlett Packard Enterprise $HPE ( ▲ 10.52% )  
was the strongest name in the S&P 500 as buyers came back to enterprise hardware.

Big name updates

Nvidia $NVDA ( ▲ 0.01% )  
CEO Jensen Huang repeated his call for a $3 trillion to $4 trillion AI market by 2030, one year to the day after he first made it at the same conference.

SpaceX $SPCX ( ▲ 1.44% )  
closed another AI hosting deal worth about $1.11 billion a month starting December 1. CFO Bret Johnsen says the $100 billion recurring revenue target is still on track.

Blue Chips
MarketBeat lists “7 Blue-Chip Stocks to Add To Your Forever Portfolio”

Adobe $ADBE ( ▲ 1.73% )  
guided current quarter revenue to $6.80 billion to $6.85 billion, roughly in line, and said its move to a freemium model could slow growth near term.

Cisco Systems $CSCO ( ▲ 3.74% )  
led the Dow, while Caterpillar $CAT added more points to the index than any other name.

Other notable company news

Shopify $SHOP ( ▲ 2.31% )  
got an outperform rating from Bernstein with a $160 target. The analysts think AI grows the business rather than eats it.

AbbVie $ABBV ( ▲ 0.85% )  
got a $300 target from Wells Fargo, which likes its patent protection and mid stage pipeline.

Chewy $CHWY ( ▼ 3.18% )  
was cut to neutral at JPMorgan with a $24 target. The analyst still likes the market share gains, just not the industry backdrop.

GameStop $GME ( ▲ 3.58% )  
rose after Ryan Cohen disclosed he bought another million shares at an average price of $20.375, taking his stake past 39 million.

RH $RH ( ▲ 0.55% )  
beat on both revenue and profit.

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Sector Watch

Bond market

The short end did the moving. The 2-year yield hit its highest level since July 2024, while the 10-year sat just under 5, about where it has been all week.

Policy watch

Fed

Wednesday is the decision. Kevin Warsh set this up at Jackson Hole when he said he saw little sign borrowing costs were slowing the economy, and the odds have climbed ever since. Three regional Fed presidents already dissented for a hike back in July, and three governors have since said they could go along. JPMorgan is the lone holdout, still calling for a hold now and a move in December.

Fiscal and trade

The deficit hit $1.96 trillion with one month left in the fiscal year. The interest bill is why it keeps growing.

• Net interest ran $86 billion in August, the biggest outlay outside Social Security, and $1.27 trillion so far this year.

• Tariffs brought in more than $23 billion last month, though Treasury refunded $10.5 billion of it after the Supreme Court struck down many of those duties.

Mark Carney says Canada is ready for a fair deal and has spoken with President Trump in recent days, a month after he walked away from the table.

International

JPMorgan expects eight of the nine developed market central banks to raise rates before year end, with the Bank of Canada the only one sitting still. The ECB went Thursday. In the UK, the economy grew faster than forecast in July, and computer programming was the biggest single contributor, mostly AI and cloud work.

What to Watch

The AI Infrastructure's Backbone
10 Stocks Powering the AI Buildout

Fed Decision, September 16

The hike is priced. What matters is whether Warsh frames it as one adjustment or the start of a cycle. Principal's Seema Shah does not expect one and done.

Oman Talks, Monday

Iran and Gulf states meet to discuss the Strait of Hormuz. Watch transit volumes rather than the statements, since that is what actually moves crude and diesel.

Thanks for reading - you are now the more informed 🙂

- John

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