S&P 500 Rebounds as Oil Cools and AI Hardware Shares Surge

The S&P 500 index climbed 1.1% to 7,674, snapping a four-session decline as West Texas Intermediate crude fell 3.0% to $99.36 per barrel. This retreat from the $100 threshold removed a key headwind for risk assets, allowing the broader market to recover ground lost earlier in the week. The Dow Jones Industrial Average followed suit, gaining 566 points, or 1.1%, to close at 52,630, while the Nasdaq 100 rose 1.1% to 29,433.

This rebound occurred despite an August inflation report that showed headline consumer prices rising 0.4% month-on-month, the highest increase in three months. Gasoline costs, which surged 3.9%, accounted for over a third of this monthly jump, pushing the annual inflation rate to 3.4%. Consequently, market-implied odds of a Federal Reserve rate hike at the September 15-16 meeting jumped from approximately 70% to 90%, yet equity markets prioritized the relief in energy prices over the hawkish monetary signal.

Oracle Capex Boosts AI Suppliers

Oracle Corp. reported first-quarter adjusted earnings per share of $1.92, up 30% year-over-year, on revenue of $19.35 billion. Cloud infrastructure revenue exploded 121% to $7.4 billion, and remaining performance obligations swelled to $664 billion, a 209% increase. Management guided full-year capital expenditure to between $90 billion and $95 billion, a figure that immediately lifted the valuation of its hardware partners.

Dell Technologies shares jumped 11.3%, leading the Russell 1000 gainers, while Hewlett Packard Enterprise rose 9.1% after posting record quarterly revenue of $12.2 billion, up 34% year-over-year. Super Micro Computer added 6.1%, and Vicor Corporation, the top performer in the large-cap index, surged 11.8%. Skyworks Solutions climbed 8.0% as CEO Phil Brace indicated the $22 billion merger with Qorvo is nearing completion, adding further momentum to the technology sector.

Inflation Data Raises Rate Hike Odds

The August consumer price index revealed that core inflation rose 0.3%, exceeding the 0.2% consensus and marking the fastest pace since April. Although the annual core rate eased to a five-year low of 2.4%, the overall stickiness in prices forced traders to reprice their expectations for central bank policy. The CBOE Volatility Index dropped 11.7% to 15.75, reflecting reduced anxiety in the market despite the higher probability of a monetary tightening event next week.

Sector Performance and Equity Dilution

Technology led all sectors with a 1.7% advance, followed by Communication Services and Industrials, while Health Care was the only sector to decline, slipping 0.2%. The VanEck Semiconductor ETF rallied 2.0%, underscoring the strength in chipmakers. In contrast, Oklo Inc. fell 7.1% after announcing an equity distribution agreement to sell up to $1 billion of Class A common stock, a move that pressured the nuclear energy segment. According to GN stocks/sp500 data, the broad-based recovery was heavily concentrated in tech, with small-cap stocks lagging as the Russell 2000 added just 0.7%.