Stocks Up on Oil Prices as CPI Sets Stage for Fed
Published as of: September 11, 2026, 9:11 a.m. ET
(Friday market open) U.S. consumer prices edged up in August but didn't completely settle debate over the Federal Reserve's rate decision next week. The headline Consumer Price Index (CPI) rose 0.4%, as expected, up from 0.1% in July, while core CPI—excluding food and energy—advanced 0.3%, above 0.2% consensus and July's 0.2%. Treasury yields inched up and then fell while stocks held earlier gains, propelled by falling oil prices.
"The Fed is looking for confirmation that the disinflationary trend is back on track, and this report shouldn't give them that confidence," said Collin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "A very strong print would have led many voters to vote for a hike next week, but it's an open question if core CPI coming in one-tenth of a percent above consensus estimates will be enough to move the needle."
Odds of a Federal Reserve rate hike next Wednesday rose to 88% after CPI from about 71% late yesterday according to the CME FedWatch Tool. Major indexes sat in the penalty box a fourth straight session Thursday as U.S. oil topped $100 per barrel for the first time since May and the 10-year Treasury note yield hit its highest point since late 2023. The Treasury's $6 billion buy back of longer-term debt designed to ease yields had no appreciable impact, and the Dow Jones Industrial Average (DJIA) is down 2.5% since last Friday while crude is up 8%.
Three things to watch
- CPI deeper dive: This CPI report was so important that beforehand, analysts advised checking statistics out to hundredths of a percentage point. August's 0.3% core CPI increase from July was nearly a full 0.3% rounded from the actual 0.289%, so it's clear the number topped expectations of 0.2% without debate. Annual headline CPI growth of 3.4% was unchanged from July and met expectations. Annual core fell to 2.4%, a five-year low, from 2.5% in July. Both CPI and yesterday's somewhat warm PPI factor into the Personal Consumption Expenditures (PCE) price index due later this month that's the Fed's main inflation guide. "New York Fed President John Williams laid out the case clearly: We need to see monthly core inflation readings of 0.2% or less to have confidence that inflation is moving sustainably towards the Fed's 2% target," Martin said. "August's core CPI print came in above that." Categories where prices rose most included shelter, air fares, education, and used cars and trucks. Shelter is weighted more in CPI than in PCE, a point the Fed might consider. Still, futures trading indicated much higher chances of a hike after the CPI data.
- Technical picture dims: The S&P 500 Index (SPX) dropped below its 50-day moving average Thursday for the first time since late July. That dip was followed by August's rally to an all-time high close just under 7,800 when peace hopes rose and oil dipped. The last month reversed that optimism, and Treasury yields are up more than 25 basis points since then. The DJIA also fell below its 50-day moving average this week, as did the chip-dominated Nasdaq-100® (NDX). All this speaks to weakening stock market momentum amid the relentless pressure from bonds and oil, and also reflects rapidly declining sector breadth. Energy is the only sector up over the last month, a sliver of the S&P 500 that mostly reflects rising oil pulling money out of consumers' pockets that could have been spent elsewhere. That likely explains why consumer discretionary stocks have struggled so much, down 6.5% since mid-August. And the SPX Relative Strength Index dipped to 43 on Thursday, from above 65 a month ago and approaching oversold territory that kicks in at 30.
- Falling oil reserves complicate Fed's job: Despite this week's stock market losses, major indexes aren't too far below all-time highs. The story, however, may be getting more complicated because of crude supply depletions in government stockpiles. "And since oil goes into everything, what about inflation getting embedded into expectations?" said Nathan Peterson, director of derivatives research and strategy at SCFR. "It's a tough spot for the Fed, especially if oil prices continue to climb, and I'm not sure markets are appreciating that." U.S. strategic reserves are the lowest since 1982. The low levels of reserves both in the U.S. and abroad suggest oil could remain expensive even if the war ends, because governments might be heavy buyers to refill reserves. Recent soft demand from China isn't likely to last forever, either. Crude fell slightly this morning after the Financial Times reported that Iran and Gulf states will meet to discuss how to manage shipping through the strait.
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On the move
- Oracle (ORCL) jumped 7% early after easily beating quarterly earnings and revenue consensus on strong cloud growth. Guidance was mostly near the middle of analysts' ranges, but investors seemed to focus on its fiscal 2027 revenue forecast of at least $90 billion, which topped Wall Street estimates.
- Adobe (ADBE) dropped 3% despite beating expectations on the bottom line and posting revenue that matched consensus. Guidance also was as expected. Shares are down 29% this year, hurt by impressions that AI could pull demand away from Adobe's products. Citigroup noted that recurring revenue growth continues to slow.
- International Paper (IP) rose more than 2% after getting an upgrade to buy from Bank of America, which previously rated shares neutral. The firm raised containerboard price forecasts.
- RH (RH) climbed more than 7% early after strong earnings from the furniture retailer.
- Microsoft (MSFT) rose slightly after Bloomberg reported the company plans to triple its data center capacity by 2032.
- Oklo (OKLO) dropped 4% after entering into a new equity offering program.
- Chip stocks, up for the most part early today after CPI generally descended Thursday, including a 2% drop for Nvidia (NVDA). Rising yields and a lead researcher at Anthropic warning of AI dangers kept semiconductor stocks muted. The PHLX Semiconductor Index (SOX) is down more than 20% from its June peak, a decline defined as a bear market.
- Consumer stocks retreated Thursday in response to higher Treasury yields. Some of the victims included department stores, cruise lines, apparel stores, and home builders. Macy's (M) fell 5% despite a strong quarter as the company's third quarter earnings guidance came in below consensus.
- Asian stock indexes closed lower across the board this week as investors prepared for a possible Bank of Japan rate hike next week. European stock indexes also fell for the week after yesterday's rate hike from the European Central Bank. Gold is down more than 2% this week on higher rate concerns.
- Technically, the S&P 500 Index finished Thursday right near its 50-day moving average of 7,590. Before Thursday, it last traded under the 50-day moving average in late July. A drop below that line for several days can sometimes suggest a loss of momentum and spark additional selling. The 100-day moving average just below 7,500 might be a support area, as it coincides with levels in late July just before the sharp rally in early August.
More insights from Schwab
A new look at housing: Along with discussion of current market developments and how Fed policy decisions could affect various assets, today's Schwab On Investing podcast focuses on struggles related to housing. Affordability challenges, elevated mortgage rates, demographic trends, and regional differences are among the topics.
Chart of the day
Data source: S&P Dow Jones Indices. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
For the first time since late July, the S&P 500 Index (SPX—candlesticks) is flirting with its 50-day moving average (blue line). A few days below that might cause accelerated selling if bearish sentiment grows. The culprit can be seen in the purple line representing the 10-year Treasury yield, which has climbed from below 4.65% in mid-August when the S&P 500 hit an all-time high to current levels above 4.9%. Crude oil also had a large role.
The week ahead
Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.
September 14: No major earnings or data expected.
September 15: No major earnings or data expected.
September 16: Fed rate decision and expected earnings from Lennar (LEN).
September 17: August housing starts and building permits.
September 18: Bank of Japan rate decision, August industrial production, and Conference Board August leading indicators.
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