The stock market rally regained momentum, with the S&P 500 and Nasdaq moving back above their 50-day moving averages and a slew of stocks flashing buy signals. Nvidia CEO Jensen Huang touted "incredible" demand for his company's AI chips. Apple unveiled its iPhone 16, though the AI "Apple Intelligence" features won't be available initially. Oracle earnings topped amid strong, AI-fueled cloud growth, while also giving bullish long-term guidance. Adobe beat shares tumbled on guidance. Novo Nordisk and Eli Lilly rallied on weight-loss drug news.
Stock Market Rally Revives
The ailing market rally took a turn for the better, with all the major indexes back above their 50-day line and many leading stock clearing buy points. Bullish comments from Nvidia as well as the Apple iPhone 16 and Oracle helped buoy AI stocks. Inflation reports were mixed, but markets expect a Fed rate cut on Sept. 18.
Disinflation Trend Intact
After a mixed bag of inflation data, and a false alarm over a bigger-than-expected rise in the core consumer price index, Wall Street is back on the fence over whether the Federal Reserve will start off its rate-cutting cycle with a bang — a 50-basis-point move. Falling energy prices held the headline CPI to a modest 0.2% increase, as the 12-month CPI inflation rate fell more than expected, to 2.5% from 2.9%. However, the core CPI, which strips out food and energy, rose a hotter-than-forecast 0.3%, leaving the 12-month core CPI inflation rate at 3.2%. Core service prices, especially housing, hotels and airfares, were the culprits. Still, producer price index data a day later presented a more benign picture, as the 0.2% monthly increase lowered the 12-month wholesale inflation rate to 1.7%. Combining the components from the PPI and CPI that feed into the Fed's primary inflation rate, the core PCE price index, economists expect a tame 0.15% increase later this month, showing that disinflation remains on track.
Apple Unveils iPhone 16 Handsets
The consumer electronics giant introduced its iPhone 16 smartphones, along with new Apple Watch smartwatches and AirPods earbuds. But the hardware news largely leaked ahead of the Sept. 9 product event. Apple touted the artificial intelligence capabilities of its iPhone 16 handsets. However, the AI features, branded Apple Intelligence, won't be available when the iPhone 16 goes on sale on Sept. 20. Apple will deliver the AI functions on a staggered schedule, starting with a software update in October.
Adobe Whiffs On Outlook
Adobe beat fiscal third-quarter estimates, with earnings per share up 14% while revenue climbed 11% to $5.41 billion. EPS growth has slowed for four straight quarters. For the current quarter, the digital media and marketing software firm forecast adjusted EPS up 9% on revenue up 10%, both slightly below views. Adobe shares tumbled after the earnings report.
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Oracle Soars On Earnings, Targets
Oracle broke out following its fiscal Q1 earnings report Monday, which showed stronger-than-expected sales growth and earnings. database software giant also announced a new partnership with Amazon Web Services. For fiscal Q1, adjusted earnings increased 17% per share and sales grew 7% to $13.3 billion. Further, Oracle said it had won 42 new cloud contracts for AI-capable computing chips, worth $3 billion total. Shares kept rising, jumping Friday after Oracle gave bullish long-term targets. Helped by AI-related cloud demand, Oracle projects $104 billion in revenue by fiscal 2029, implying a 16% compound annual growth rate. Oracle stock is ahead more than 50% year-to-date.
Lenders Beware
Warnings from Dow components JPMorgan Chase, Goldman Sachs, as well as auto lending giant Ally Financial, hit banks and lenders. JPMorgan President Daniel Pinto said 2025 net interest income "will be lower" than analyst forecasts for $90 billion. Goldman Sachs said Q3 trading revenue fell 10% vs. a year earlier. Ally CFO Russell Hutchinson said, "Our borrower is struggling with high inflation and cost of living, and now more recently, a weakening employment picture." Ally's warning also hit auto dealers and some automakers.
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Weight-Loss Drug News Tips Scales
Shares of Novo Nordisk and Roche diverged Wednesday after the duo unveiled key pieces of news from studies of their oral weight-loss drugs. Novo said participants who took its experimental drug, amycretin, lost 13.1% of their body weight over 12 weeks. That topped the 6% weight loss shown by blockbuster shot Wegovy in a 12-week study. In another study, Wegovy recipients lost 15% of their body weight over 68 weeks. But Roche stock slipped after revealing that the strong results of a recent study of its weight-loss pill, CT-996, were based on just six participants. That adds uncertainty to the pill's effectiveness. In response, Eli Lilly, Viking Therapeutics and Structure Therapeutics — all of which are also working on weight-loss pills — popped.
In Brief
Nvidia CEO Jensen Huang, speaking at a conference, said demand for the company's AI processors for data centers remains "incredible." Huang noted that Nvidia is struggling to keep up with orders. He said production of its next-generation chips, named Blackwell, is ramping now and is in full production. Nvidia stock soared.
Taiwan Semiconductor Manufacturing reported August sales rose 33% vs. a year earlier in local currency, equivalent to $7.8 billion. Taiwan Semi is on track to slightly beat third-quarter targets.
Kroger reported a 3% EPS decline, slightly beating, while revenue ticked up to $33.91 billion, just shy of estimates. The grocery giant slightly raised the low end of its full-year same-store sales growth target. CEO Rodney McMullen said Kroger is committed to its pending merger with Albertsons amid an antitrust court fight. KR stock jumped Thursday.
