Oil past $100 and a hawkish Fed rethink: Wall Street's week

The Dow Jones Industrial Average lost 1,350.15 points in the space of three sessions this week, ending Thursday at 52,064.10 against the 53,414.25 it had managed a week earlier — a fall of 2.53%. The S&P 500 shed 1.64% over the same stretch to close at 7,591.70 and the Nasdaq Composite 1.60% to 26,081.72. One thing did the damage, and our daily notes named it from Monday morning onwards: oil.

Wall Street was shut on Monday for Labor Day, the American public holiday that closes the New York Stock Exchange, the Nasdaq and the US bond market for the full day. While it was closed, Brent crude sat at roughly $97.13 a barrel after US forces struck three Iranian tankers over the weekend and Tehran retaliated against shipping in the Strait of Hormuz. By Thursday, Brent had touched $101.13 — a rise of about 4% in four days. That move is the entire week in miniature. It showed up in the inflation figures within 48 hours, it drove the 10-year Treasury yield to roughly 4.97%, its highest since October 2023, and it turned next Wednesday's Federal Reserve decision from a genuine argument into something the market now treats as close to settled.

The sentiment we logged tracked it exactly: Mixed on Monday's holiday note, then Risk-off on Tuesday, Wednesday and Thursday, and Cautious this morning. Notably, we did not upgrade to risk-on even as Friday's session opened higher — and that caution looks right, because what ended the selling was an inflation print that simultaneously cemented the case for higher interest rates.

How the week unfolded

Only four trading sessions were available, and three of them went the same way. Tuesday's reopening was ugly: the Dow fell 628 points, or 1.18%, to 52,786.07, with the S&P 500 down 0.58% at 7,673.52 and the Nasdaq Composite off 0.32% at 26,421.41. Large technology names led the retreat — we recorded Apple down 2.55%, Alphabet off 2.10% and Microsoft down 2.05% in early trade — while industrial and consumer names such as Caterpillar and Home Depot held their ground. Canada's retaliatory tariffs of 15% to 50% on roughly $27.6bn of US goods took effect at one minute past midnight that morning, an additional weight rather than the main one.

Wednesday brought no relief. US Central Command destroyed five more Iranian tankers overnight, Brent broke above $100 a barrel for the first time since July, and the Dow fell a further 405.41 points, or 0.8%, to 52,380.66; the S&P 500 slipped 0.5% to 7,636.36 and the Nasdaq 0.6% to 26,253.34.

Thursday is where the catalysts we had flagged on Monday actually landed. The August producer price index — the measure of prices charged by American producers, which typically feeds through into consumer prices a month or two later — rose 0.4% on the month, in line with forecasts, but 5.4% year-on-year against the 5.3% expected. That was an acceleration from 4.8% in July and the hottest annual reading of this cycle, and the reason was plainly visible in the detail: energy prices rose 4.2% and diesel alone jumped 24.1%. The indices fell for a fourth consecutive session, the Dow down 316.56 points, or 0.6%, to 52,064.10.

Friday's consumer price index, which we had trailed all week as the last major data point before the Fed meets, arrived at 8.30am in New York. Headline CPI rose 0.4% on the month and 3.4% on the year, both exactly in line with forecasts and unchanged from July. Core CPI, which strips out food and energy, rose 0.3% on the month — a tenth of a percentage point above consensus — with the annual rate easing to 2.4%. Petrol prices rose 3.9% in August and accounted for more than a third of the monthly increase on their own, which is the oil story arriving in the data exactly as our notes implied it would.

As this article is published, Friday's session is still open. Wall Street does not close until 4pm in New York, or 9pm in the UK, so there are no closing figures for today and nothing below should be read as one. In early-afternoon trading in New York, the S&P 500 was up around 0.96%, the Dow up about 1.15% and the Nasdaq Composite up roughly 0.88%, with West Texas Intermediate crude down about 3% at $99.44 a barrel as some of the week's geopolitical premium came out. Even with that bounce, all three indices were tracking a weekly loss when we went to press.

The clearest resolution of anything we flagged is in the interest rate market. At the start of the week, futures put the chance of a quarter-point rise at next Wednesday's meeting at roughly 55% to 60%. By Thursday that was about 72%, and after Friday's CPI it stood near 86% on the CME FedWatch tool. The Fed's blackout period — the stretch before each meeting when officials stop commenting publicly on policy — began the Saturday before this week started, so that repricing happened entirely on data and oil, with no help from central bank speeches.

The names that moved it

Oracle was the company we flagged earliest and the one that delivered most. We named its fiscal first-quarter results in Monday's holiday note, five days before they arrived, and by Thursday the options market was pricing an 11% swing in the share price. The numbers beat: adjusted earnings of $1.92 a share against the $1.74 expected, revenue up 30% to $19.35bn against $19.14bn forecast, and cloud infrastructure revenue up 121% to $7.4bn. Oracle raised its full-year outlook to at least $90bn of revenue and $8.10 of adjusted earnings a share, and the shares rose about 7% in after-hours trading — the extended session that follows the 4pm close, where American companies traditionally report. Capital spending told its own story, at $28.5bn in the quarter against $8.5bn a year earlier. You can follow the name on our Oracle page.

Adobe reported the same evening to a flatter reception, guiding to adjusted earnings of $6.30 to $6.35 a share against the $6.32 analysts had pencilled in, and the shares slipped about 2%. Copart was the week's other upside surprise, rallying more than 8% after a fourth-quarter revenue beat and an agreement to buy ACV Auctions for $10.50 a share in cash, which sent ACV up 44%.

Retail was the week's most consistent disappointment, and in a revealing way. Signet Jewelers beat handsomely, with adjusted second-quarter earnings of $2.19 a share against $1.74 expected and raised full-year guidance, and jumped 17% before the bell on Wednesday. But Macy's beat too — 63 cents a share against 37 cents expected, comparable sales up 2.7%, Bloomingdale's up 11.3%, and a raised full-year outlook of $2.15 to $2.35 a share — and still fell 4.7% in pre-market trading on Thursday, simply swamped by the wider selling. Casey's General Stores fell roughly 8% on slowing same-store sales, and Kroger was indicated about 3% lower this morning after cutting its annual identical-sales forecast, with second-quarter comparable growth down to 0.2% from 3.4% a year earlier. A week in which a retailer can beat and raise and still lose 4.7% tells you how completely the macro picture dominated.

Apple held its launch event on Wednesday afternoon, the first under new chief executive John Ternus, unveiling a foldable iPhone alongside the iPhone 18 Pro. It was a notable corporate moment that the tape barely registered — the shares had already led Tuesday's decline. Our screener lists the US names covered in this week's notes.

What to watch next week

One date matters more than the rest. The Federal Open Market Committee meets on 15 and 16 September, with the decision and Chair Kevin Warsh's press conference on Wednesday afternoon in New York. Futures markets have moved a long way towards a quarter-point rise this week, so the interest lies as much in the accompanying projections and commentary as in the decision itself — particularly on how the Fed treats an oil-driven inflation impulse it cannot control.

Beyond that, the calendar thins considerably after a heavy run of results. The Fed's blackout period ends with the meeting, so official commentary resumes from Wednesday onwards.