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Update: US Equity Indexes Rise After August Inflation Print Triggers Rally in Shorter-Maturity Treasury Yields, Crude Oil Slumps

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(Updates with index/price moves, comments and company/geopolitical news from the first paragraph.)

US equity indexes rose amid a broad-based rally after August's inflation print sparked a surge in short-term government bond yields while crude oil slid ahead of a potential meeting between the Gulf states and Iran to stem their spiralling war.

The Nasdaq Composite jumped 1% to 26,333.04, the S&P 500 rose 0.9% to 7,656.98, and the Dow Jones Industrial Average climbed 1% to 52,573.29 on Friday. All but two sectors, health care and utilities, rose. Communication services, consumer discretionary and technology led the gainers.

The consumer price index rose 0.4%, the fastest pace since May and above July's 0.1% increase, Bureau of Labor Statistics data showed Friday. The move matched the Bloomberg-polled consensus. Core inflation jumped to a four-month high of 0.3%, exceeding projections for an unchanged 0.2% gain. On an annual basis, headline inflation held steady at 3.4%, as expected. The annual core measure eased to 2.4% from 2.5%, also in line with projections.

Today's "ambiguous CPI data doesn't conclusively show evidence of continued disinflation or a continued trend of above-target inflation going forward," Jefferies Chief US Economist Thomas Simons said in a note.

"The rate decision at this meeting is a very close call, and it seems that no matter what the FOMC does, there will be criticism that they are making a mistake," Simons said. "If they hike, they will have to deal with setting expectations for further rate hikes, knowing that oil prices could crash at any time if there is a resolution to the situation in Iran. If they hold, they risk losing their inflation-fighting credibility, and they will be defying a market that is pricing in odds of nearly 90% for a hike."

Supercore inflation - core services excluding housing - jumped 0.5% in August, marking the largest monthly gain in four months, according to a Stifel note. Over the past 12 months, the supercore grew 3.0%, accelerating from the 2.8% gain in July and marking the fastest pace since June.

Last month, Fed Chair Kevin Warsh reiterated the Fed's commitment to eventually reinstating price stability, but market participants remained skeptical of any policy tightening, the Stifel note said. "There is no doubt the Fed should raise rates, but the question remains: Will they?"

Most US Treasury yields rose. The two-year shot up 7.8 basis points to 4.63%, the highest since mid-2024. The 10-year yield climbed 2.7 basis points to 4.97%, the strongest level since October 2023.

A six-member bloc of Gulf states is weighing a meeting with Iran next week to discuss the future of the Strait of Hormuz, people familiar with the matter told Bloomberg. Oman is aiming to assemble foreign ministers from the Gulf Cooperation Council and Iran on Monday in Salalah, a southern Omani city, sources told the news agency.

The front-month US West Texas Intermediate crude oil contract slumped 2% to $100.44 per barrel, and global benchmark North Sea Brent dropped 2.6% to $104.80 per barrel. Both crude types were off their respective session lows after Saudi Arabia's Ministry of Energy said Friday that a key crude oil pipeline had been attacked and "was shut down as a precautionary measure," according to CNN.

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Update: US Equity Indexes Decline as Treasury Yields Soar Amid Hot Wholesale Inflation Print, Escalation in Iran War Threatens Red Sea Chokepoint

(Updates with index/price moves, macroeconomic data and company/geopolitical news from the first paragraph.)US equity indexes fell as crude oil and government bond yields surged after an inflation gauge grew at the fastest pace in three months and an Iran-aligned militia group's threats to an alternative shipping route to the Strait of Hormuz mounted.The Nasdaq Composite declined 0.7% to 26,081.73, the S&P 500 retreated 0.6% to 7,591.70, and the Dow Jones Industrial Average dropped 0.6% to 52,064.10 on Thursday. All sectors except communication services and consumer staples dropped. Materials and utilities led the decliners.The Bureau of Labor Statistics' wholesale price inflation gauge, the Producer Price Index, jumped 5.4% from a year ago in August, above the 5.3% forecast in a Bloomberg-compiled survey, and 4.8% in July. The PPI edged up 0.4% month over month, as expected, following a 0.1% increase in July. The August print is the highest growth rate since May.Core PPI, which excludes volatile food and energy prices, climbed 4.6%, as anticipated, from a year ago, and up from 4.3% in July. Core PPI climbed 0.2%, below July's 0.3% and the 0.3% forecast."Based on the timing of the PPI survey, we expect another rise in September's report, as diesel prices have climbed nearly 60 cents and gasoline prices have risen close to 20 cents during the survey window, which is in the middle of the month," Grace Zwemmer, US economist at Oxford Economics, said in a note.US Treasury yields traded sharply higher across the term structure, with the 10-year yield surging 12.3 basis points to 4.96%, the highest since October 2023.The European Central Bank raised its three key interest rates by 25 basis points on Thursday, as the energy shock caused by the ongoing Middle East war pushed inflation in the euro area above its 2% medium-term target.Iran-aligned Houthis seized control of Yemen's port city of Mocha on Thursday, military sources said, gaining further leverage over the Bab el-Mandeb Strait, the southern outlet of the Red Sea, according to a report from Reuters. Bab al-Mandeb is a geopolitical chokepoint similar to the Strait of Hormuz linking Asia and Europe via the Suez Canal.If the Houthis impose a stranglehold over the waterway, on the opposite side of the Arabian Peninsula from the Strait of Hormuz, it could give their sponsor Iran a critical advantage in the war with the United States, reducing supplies through a second major transit corridor, the news report said.Saudi Arabia reported to the Organization of the Petroleum Exporting Countries that its crude oil production plunged again last month, down by 1.9 million barrels a day to 6.238 million barrels, the lowest since 1990, as renewed hostilities between the US and Iran squeezed the kingdom's export routes, Bloomberg reported.The front-month US West Texas Intermediate crude oil contract climbed 7.2% to $102.92 per barrel, and global benchmark North Sea Brent rose 6.9% to $108.16 per barrel.Gold futures dropped 2.2% to $4,363.5, and silver futures sank 6.6% to $64.15.In US company news, shares of Cooper Companies (COO) sank almost 15%, the worst performer on the S&P 500, after a fiscal Q3 revenue miss overshadowed its earnings beat, and the company also cut its full-year outlook.Apple (AAPL) rose 3.6%, the Dow's top gainer, as the iPhone manufacturer unveiled its first foldable smartphone on Wednesday.

Dow JonesNasdaq CompositeS&P 500$AAPL$COO
Asia Markets

Update: US Equity Indexes Slide as Treasury Yields Surge Amid Hot Producer Prices, Soaring Crude Oil

(Updates with index/price moves, macroeconomic data, comments and company/geopolitical news from the first paragraph.)US equity indexes fell as crude oil and government bond yields soared after an inflation gauge grew at the quickest pace in three months and an Iran-aligned militia group's threat to the alternative shipping route to the Strait of Hormuz escalated.The Nasdaq Composite declined 0.4% to 26,152.3, the S&P 500 retreated 0.4% to 7,602.5, and the Dow Jones Industrial Average dropped 0.5% to 52,096.8 after midday Thursday. All sectors except communication services and consumer staples fell, with materials leading the steepest decliners.The Bureau of Labor Statistics' wholesale price inflation gauge, the Producer Price Index, jumped 5.4% from a year ago in August, above the 5.3% forecast in a Bloomberg-compiled survey, and 4.8% in July. The PPI edged up 0.4% month over month, as expected, following a 0.1% increase in July. The August print is the highest growth rate since May.Core PPI, which excludes the more volatile food and energy prices, climbed 4.6%, as anticipated, from a year ago, and up from 4.3% in July. Core PPI climbed 0.2%, below July's 0.3% and the 0.3% forecast."Based on the timing of the PPI survey, we expect another rise in September's report, as diesel prices have climbed nearly 60 cents and gasoline prices have risen close to 20 cents during the survey window, which is in the middle of the month," Grace Zwemmer, US economist at Oxford Economics, said in a note.US Treasury yields jumped after midday. The two-year soared 11.9 basis points to 4.55%, the highest since mid-2024. The 10-year yield surged 7.4 basis points to 4.91%, its strongest level since late 2023.The European Central Bank raised its three key interest rates by 25 basis points on Thursday, as the energy shock caused by the ongoing Middle East war pushes inflation in the euro area above its 2% medium-term target.In further US economic news, initial jobless claims fell to 206,000 in the week ended Sept. 5 from an upwardly revised 207,000 in the previous week, compared with expectations for 205,000 in a Bloomberg-compiled poll.Meanwhile, Iran-aligned Houthis seized control of Yemen's port city of Mocha on Thursday, military sources said, gaining further leverage over the Bab el-Mandeb Strait, the southern outlet of the Red Sea and an important shipping route, according to a report from Reuters.Pakistan has delivered a Saudi warning to Iran to rein in its Yemeni Houthi allies, whose move threatens the kingdom's exports through the Red Sea, to prevent the Middle East crisis from spiralling, Saudi, Pakistani and Iranian sources told Reuters.The front-month US West Texas Intermediate crude oil contract catapulted 5.6% to $101.42 per barrel, and global benchmark North Sea Brent shot up 5.5% to $106.79 per barrel.Gold futures dropped 1.4% to $4,400.1, and silver futures sank 5.5% to $64.86.In US company news, shares of Cooper Companies (COO) sank 15%, the worst performer on the S&P 500, after a fiscal Q3 revenue miss overshadowed its earnings beat, and the company also cut its full-year outlook.Apple (AAPL) rose 2.5%, the Dow's top gainer, as the iPhone manufacturer unveiled its first foldable smartphone on Wednesday.

Dow JonesNasdaq CompositeS&P 500$AAPL$COO
Asia Markets

Exchange-Traded Funds, US Equities Fall After Midday

Broad-market exchange-traded funds IWM and IVV were lower. Actively traded Invesco QQQ Trust (QQQ) fell 0.9%.US equity indexes fell after an inflation gauge jumped at the quickest pace in three months while an Iran-aligned militia group's threat to the alternative shipping route through the Strait of Hormuz grew stronger.EnergyIShares US Energy ETF (IYE) lost 0.2% and the State Street Energy Select Sector SPDR (XLE) fell 0.4%.TechnologyThe State Street Technology Select Sector SPDR ETF (XLK) shed 1.1%; iShares US Technology ETF (IYW) dropped 0.7%, and iShares Expanded Tech Sector ETF (IGM) declined 0.7%.The State Street SPDR S&P Semiconductor (XSD) shed 0.2%, while iShares Semiconductor (SOXX) dropped 2.1%.FinancialThe State Street Financial Select Sector SPDR (XLF) slipped 0.4%. Direxion Daily Financial Bull 3X Shares (FAS) decreased 1%, and its bearish counterpart, Direxion Daily Financial Bear 3X Shares (FAZ), advanced 1.2%.CommoditiesCrude oil increased 5.5%, and the United States Oil Fund (USO) gained 4.4%. Natural gas shed 0.5%, and the United States Natural Gas Fund (UNG) dropped 0.1%.Gold on Comex declined 1.3%, and the State Street SPDR Gold Shares (GLD) moved 0.9% lower. Silver fell 5.6%, and iShares Silver Trust (SLV) lost 4.3%.ConsumerThe State Street Consumer Staples Select Sector SPDR (XLP) gained 0.3%. The Vanguard Consumer Staples ETF (VDC) increased 0.2%, and iShares Dow Jones US Consumer Goods (IYK) rose 0.4%.The State Street Consumer Discretionary Select Sector SPDR (XLY) was fractionally lower. The VanEck Retail ETF (RTH) fell 0.4%, and the State Street SPDR S&P Retail (XRT) dropped 0.6%.HealthcareThe State Street Health Care Select Sector SPDR (XLV) fell 0.4%; iShares US Healthcare (IYH) and Vanguard Health Care ETF (VHT) declined 0.5% each, while iShares Biotechnology ETF (IBB) shed 1.3%.IndustrialThe State Street Industrial Select Sector SPDR (XLI) was 0.7% lower. The Vanguard Industrials Index Fund (VIS) shed 0.8% and iShares US Industrials (IYJ) dropped 0.6%.CryptocurrencyIn midday activity, bitcoin (BTC-USD) decreased 1.4%. Among cryptocurrency ETFs, ProShares Bitcoin ETF (BITO) decreased 1.4%, ProShares Ether ETF (EETH) fell 1%, and ProShares Bitcoin & Ether Market Cap Weight ETF (BETH) was down 1.5%.

Dow Jones^EEM^EXI^FAS^FAZ^GLD^IBB^IGM^IGV^IPK^IVV^IWMNasdaq Composite^IYE^IYH^IYJ^IYK^IYW^PMR^QQQ^RTH^SOXXS&P 500^SPY^UNG^USO^VDC^VHT^VIS^XLE^XLF^XLI^XLK^XLP^XLV^XRT^XSD$BETH$BITO$EETH