📊 Market Overview
The S&P 500, Dow, and Nasdaq finished mixed yesterday as the PPI (Producer Price Index — a measure of wholesale inflation) came in at 0.4% month-over-month, exactly as expected, but the annual rate hit 5.4% versus the 5.3% forecast. The slightly hotter-than-expected yearly number kept pressure on the Fed (the Federal Reserve, America’s central bank that sets interest rates) and prevented markets from rallying. All eyes now shift to tomorrow’s CPI (Consumer Price Index — a measure of what everyday consumers pay), which JPMorgan has flagged as the real “clearing event” for the Fed’s September decision.
📊 Market Snapshot
Today’s inflation reading didn’t break anything, but it didn’t give the all-clear either — tomorrow’s CPI is the number that actually matters for your portfolio.
📈 The Big Picture
Inflation is sticky but not spiraling. The headline PPI ran a touch hot on a yearly basis, and last month’s numbers were revised upward (from 0% to 0.1% monthly and from 4.7% to 4.8% annually). That’s not panic-worthy, but it’s not the cooling trend the market was hoping for. Bank of America had already identified this PPI/CPI pair as the data that could decide whether the Fed raises rates again in September. Core PPI (stripping out volatile food and energy prices) actually came in softer at 0.2% versus the expected 0.3%, which offered some relief — but not enough to close the debate.
Meanwhile, the micro picture — meaning individual company fundamentals — looks remarkably strong, especially in AI. TSMC hit record August revenues, ASML’s orders stretch into 2028, and Goldman Sachs’ Communacopia conference revealed that enterprise AI is moving beyond experiments into real company infrastructure. If you hold tech or AI-related stocks, the underlying demand story remains very much intact — the question is whether inflation lets the market reward it.
📖 Term of the Day
PPI (Producer Price Index): A measure of the average prices that factories and producers receive for their goods — think of it as inflation at the wholesale level, before it reaches your shopping cart. Why you care today: Today’s PPI came in slightly hot on an annual basis, and because producer prices often flow through to consumer prices, it sets the tone for tomorrow’s even more important CPI reading.
💼 Watchlist: 3 Stocks to Know Today
TSMC (TSM) — “The Record-Breaker”
TSMC just posted record August revenues, with its most advanced chip production lines running at full capacity and its next-generation 2nm chips already starting to contribute. Semiconductor equipment makers like ASML, Lam Research (LRCX), and Applied Materials (AMAT) all confirm orders are booked well into 2028, reinforcing that AI chip demand is real and growing.
Microsoft (MSFT) — “The Bottleneck”
Microsoft confirmed at the Goldman Sachs conference that Azure cloud demand still exceeds supply — the problem is building data centers fast enough, not finding customers. The company has cut its equipment-to-launch time by roughly 50% and is planning long-term land and power deals, signaling its massive AI spending is driven by actual demand, not speculation.
Oracle (ORCL) — “Tonight’s Wild Card”
Oracle reports earnings after the bell today, and the stock has dropped about 25% since its last report on concerns about data center profitability and rising costs. Bank of America sees a potential revenue acceleration as new projects come online — watch for strong RPO (Remaining Performance Obligations, meaning backlog of future contracted revenue) conversion and controlled capital spending as signs that Oracle’s AI cloud bet is paying off.
💬 Esther’s Take
