MARKET SNAPSHOT
U.S. stocks rose after the latest inflation reading increased the chances of a Federal Reserve rate increase in traders' eyes. U.S. Treasury yields ended the week higher ahead of the Fed's upcoming meeting. Gold futures held steady as a pullback in oil prices helped offset the impact of increased expectations for a Fed rate increase. The U.S. dollar weakened slightly.
MARKET WRAPS EQUITIES
U.S. stocks rallied Friday after the latest inflation reading increased the chances of a Federal Reserve rate hike in traders' eyes.
The Dow Jones Industrial Average rose 1%. The S&P 500 increased 0.9%, and the Nasdaq composite added 1%.
The Labor Department said that the inflation rate held steady at 3.4% in August. That matched analyst expectations and was even with July's 3.4%. But a key measure of underlying price trends, however, came in stronger than expected.
The figures confirmed a narrative among investors that inflation has remained too high for the Fed to keep rates at their current level. Traders recently were putting an 87% chance on a rate increase at the Fed's meeting in the coming week.
Stocks rose, a signal that investors like the idea of a rate hike tamping down inflation.
Earlier Friday, stocks in Asia fell sharply.
China's benchmark Shanghai Composite Index fell 1.2%, the Shenzhen Composite Index dropped 1.5%, and the ChiNext Price Index declined 0.5%.
Hong Kong's Hang Seng Index fell 0.6%.
Japan's Nikkei Stock Average dropped 1.9%.
South Korea's Kospi fell 1.8%.
Australia's S&P/ASX 200 Index closed 0.9% lower.
New Zealand's S&P/NZX 50 Index fell 1.0%.
COMMODITIES
Oil prices fell Friday but ended the week sharply higher as traders assessed growing risks to Middle East crude exports from renewed fighting between the U.S. and Iran and fresh territorial gains made by Iran-backed Houthi militants in Yemen.
Front-month Brent crude oil settled down 2.8% at $104.61 a barrel, snapping a five-session winning streak but ending the week up 8.7%. Front-month West Texas Intermediate crude fell 2.4% to $100.05 a barrel after rising the previous eight sessions, and was up 9.4% on the week.
Friday's pullback marked a correction from an overbought condition, helped in part by reports that Oman is seeking a meeting with officials from Iran and other Gulf states to discuss shipping in the Strait of Hormuz, Dennis Kissler, senior vice president of trading at BOK Financial, said in a note.
Gold futures held steady as a pullback in oil prices helped offset the impact of the inflation report increasing expectations for a Fed interest-rate rise in the coming week.
Front-month gold settled little changed on the day in New York at $4,366.20 a troy ounce, and was down 1.4% for the week.
Gold and silver remain within a range of strong support, said Peter Cardillo of Spartan Capital, and if the Fed does raise interest rates in the coming week "it's symbolic since the bond market had already tightened."
Silver settled up 0.4% at $64.554 a troy ounce, down 2.3% from a week ago.
TODAY'S TOP HEADLINES
Firm Inflation Reading Pushes Fed Closer to a Rate Increase
The annual inflation rate stalled out last month, with Americans still paying high prices for gasoline. The report could put more pressure on a Federal Reserve that has been sharply divided over whether it should raise rates at its meeting next week.
The Labor Department said Friday that the inflation rate held steady at 3.4% in August. That matched analyst expectations and was even with July's 3.4%. A key measure of underlying price trends, however, came in stronger than expected.
Consumer Sentiment Is Lower in September, per Michigan Survey
Consumer sentiment has dropped in September, according to the initial reading of the University of Michigan's monthly survey.
The survey's index stands at 47.8, versus the 51.7 recorded at the end of August. Economists polled by The Wall Street Journal were expecting a reading of 51.4.
The decline brings sentiment back down toward historical lows reached earlier this year. If the reading holds in the final September reading coming later this month, it would be the second-lowest reading in the survey's history.
Iran-Backed Houthis Take Effective Control of Key Red Sea Chokepoint
DUBAI-Iran-backed Houthi militants seized a strategic island in the Bab al-Mandeb strait and a town along its mainland coast Friday, taking effective control of one of the world's most important shipping chokepoints after a rapid offensive.
The gains raised the stakes in the broader conflict sparked by the U.S. and Israel war with Iran. They came despite long-running Saudi military support for forces opposing the Houthis and, people familiar with the matter said, U.S. technical support and intelligence in the fighting.
Saudi Crown Prince Mohammed bin Salman asked President Trump for military help, but the president said the U.S. would help with everything but attacks, people familiar with the matter said. Adm. Brad Cooper, who runs Central Command and is responsible for the Middle East, was in Saudi Arabia to show support, they said. The U.S. has dozens of military advisers in Saudi Arabia helping with the fight, some of the people said.
Week Ahead for FX, Bonds: All Eyes on Fed Rate Decision
An interest-rate decision by the U.S. Federal Reserve will be firmly at the center of markets' attention in the coming week, where a hike looks a possibility after strong jobs data and solid inflation numbers.
A rate decision is also scheduled in the U.K. while the Bank of Japan is widely expected to increase interest rates. The BOJ's decision will headline a busy week in Asia, while Taiwan's central bank is expected to also tighten policy. China's economic activity data will offer another test of its export-led growth, while Indian inflation will provide further clues of policymakers' thinking.
Abu Dhabi's Oil Giant Inks Partnerships With German Energy, Industry Groups as Part of UAE's $46.5 Billion Investment
Abu Dhabi's national oil-and-gas company said it signed a raft of deals with a potential investment value of 5 billion euros ($5.81 billion) with German energy and industrial groups, part of a major investment by the United Arab Emirates.
Adnoc said Friday that along with its investment arm XRG and the emirate's clean-energy company Masdar, it signed initial deals with companies including power firm RWE, Siemens Industrial and Siemens Energy, and industrial groups Covestro and Bosch Middle East.
The deals come as capital-rich UAE looks to invest some 40 billion euros in Europe's largest economy, where its leaders have been received on a visit this week. The agreements "build on our investments across Germany's energy and industrial landscape and mark another step forward in greater cooperation that will create new opportunities for both countries," said Sultan Ahmed Al Jaber, Adnoc's chief executive and the UAE's industry minister.
OpenAI's Fidji Simo to Join Board of Cloud Provider Nscale Ahead of IPO
Former OpenAI executive Fidji Simo has joined the board of directors at Nscale, a startup that has raised billions to build data centers for artificial intelligence, according to a person familiar with the matter.
Simo's appointment could be announced as soon as Friday morning.
Simo joins the board as Nscale prepares for a potential initial public offering as soon as this month. Simo will continue to serve as a part-time adviser to OpenAI and recuse herself from any Nscale board matters that may involve the AI startup, the person said.
Expected Major Events for Monday 04:30/JPN: Jul Revised Industrial Production
08:30/HK: 2Q Gross National Product & External Factor Income Flows
08:30/HK: 2Q Quarterly Index of Industrial Production & Quarterly Producer Price Indices for Manufacturing Industries
09:59/CHN: Aug Broad Money M2
21:00/NZ: Aug REINZ Monthly Housing Price Index
21:00/NZ: Aug REINZ Residential Market Report
21:00/SKA: Aug Import price index
21:00/SKA: Aug Export price index
21:00/SKA: Aug Net barter terms of trade
22:45/NZ: Aug Electronic Card Transactions
00:00/SKA: Aug Revised trade data
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