Dow Rebounds as Oil Retreats and Inflation Data Lands
Major US indexes snapped a four-day losing streak Friday, driven by falling crude oil prices and a CPI report that matched economic forecasts.
The Dow Jones Industrial Average climbed 1.0% to 52,573 on Friday, ending a four-session losing streak. The broader S&P 500 gained 0.9% to 7,656, while the Nasdaq Composite rose 1.0% to 26,333. Market participants reacted positively to the Bureau of Labor Statistics report showing headline inflation rose 0.4% in August, a figure that aligned with economist expectations. This data point helped offset rising concerns about monetary policy tightening, as bargain hunters entered the market after recent declines.
Inflation Data Matches Forecasts
The August CPI report indicated that gas prices were a primary driver of the monthly increase, with the gasoline index jumping 3.9%. Year-over-year gas costs stood at 27.4% higher. Core inflation, which excludes volatile food and energy items, increased 0.3% month-over-month and 2.4% year-over-year, slightly decelerating from the previous month’s 2.5%. According to GN stocks/nasdaq reporting, the data was consistent with the 0.1% increase seen in July, though the monthly pace accelerated.
Oil Prices Impact Rate Expectations
Front-month West Texas Intermediate crude futures dropped 2.7% to $99.68 per barrel, providing relief to equity markets. Despite the daily decline, crude prices remain up 16% for the month. The combination of high energy costs and the CPI report pushed the probability of a 25 basis point Federal Reserve rate hike to 86%, up from 71% the previous day. Bill Adams, chief U.S. economist at Fifth Third Commercial Bank, noted that while the August data could be viewed positively in isolation, the surge in September energy costs likely tilts the balance toward a rate increase at the upcoming meeting.
Dell Leads Tech Sector Gains
Dell Technologies (DELL) emerged as a key driver of the rally, surging 12% after RBC Capital Markets initiated coverage with an Outperform rating. The firm set a $640 price target, citing the company’s position in the multi-year AI infrastructure spending cycle and its supply chain resilience. Dell previously raised its fiscal 2027 revenue guidance to $192 billion, up from $167 billion, driven by price adjustments and strong demand. The stock is up 350% year-to-date, making it one of the top performers in the S&P 500.
Cisco Systems (CSCO) also performed strongly, jumping 4.4% to become the top gainer among Dow Jones members. This move extends Cisco’s year-to-date return to 45%, the highest among the index’s 30 constituents. The broader tech sector benefited from the day’s risk-on sentiment, with investors focusing on companies demonstrating robust demand and strong balance sheets amidst the current macroeconomic environment.
