Closing Recap

U.S. stocks finished mixed with a negative bias as a cooler-than-expected PPI report solidified Fed rate cut hopes but failed to ignite a broad rally, with investors showing caution ahead of tomorrow’s key CPI data; gold and oil were little changed, while the dollar was mixed and Treasury yields fell. In the currency markets, the U.S. dollar remained under pressure as dovish Fed expectations grew, with EUR/USD holding firm around 1.1700 and GBP/USD trading above 1.3500 ahead of the ECB policy decision. 

Key Takeaways 

• Mixed, Cautious Session: The S&P 500 and Dow finished lower, while the Nasdaq eked out a small gain. Oracle’s strong earnings provided a lift to large-cap tech. 
• Cooler PPI Reinforces Rate Cut Bets: August PPI came in softer than expected (headline & core both -0.1% m/m), reinforcing the market’s conviction in a September Fed rate cut and boosting the odds of a larger 50bps move. 
• Focus on CPI & ECB: Investor attention now shifts squarely to tomorrow’s U.S. Consumer Price Index (CPI) report and the European Central Bank’s rate decision. 
• Gold Flat, Oil Rallies: Gold prices finished nearly unchanged after a volatile session, while crude oil rallied over 1.6% on the dovish Fed narrative. 
• Forex market: The U.S. dollar was mixed, with EUR/USD and GBP/USD holding firm on expectations of divergent central bank policies, while USD/JPY remained in a tight range ahead of inflation data. 
• Cryptocurrencies: Bitcoin and crypto assets rallied, with Bitcoin climbing past $114,000 as traders positioned ahead of the key U.S. inflation report. 
• Treasury Yields Fall: Treasury yields declined across the curve as the soft PPI data supported the case for Fed easing. 

Market Overview 

U.S. equity markets experienced a day of consolidation and modest declines as investors digested another round of soft inflation data and positioned themselves ahead of tomorrow’s crucial Consumer Price Index (CPI) report. After a strong open, buoyed by a significant earnings beat from software giant Oracle (ORCL), the market’s momentum faded throughout the day. The August Producer Price Index (PPI) report, which showed a surprise month-over-month decline in both headline and core wholesale prices, further solidified the market’s already high conviction in a Federal Reserve rate cut next week. Following the data, Fed funds futures increased the probability of a larger 50-basis-point cut and priced in a more aggressive easing path through 2026. 

Index	Up/Down	% Change	Last
DJ Industrials	-220.42	-0.0048	45490
S&P 500	19.44	0.003	6532
Nasdaq	6.57	0.0003	21886
Russell 2000	-3.8	-0.0016	2378

Despite this dovish setup, stocks failed to rally significantly, suggesting a degree of caution or “good news is priced in” sentiment. Wall Street analysts continue to raise their S&P 500 targets, with Barclays and Wells Fargo now forecasting multiple rate cuts this year and into next. However, the market seems to be waiting for the final piece of the inflation puzzle—tomorrow’s CPI data—before making its next decisive move. 

The session was light on other major catalysts. Geopolitical headlines were relatively subdued, though reports of Russian drones being downed in Polish airspace provided some background noise. The market is now looking ahead to a packed Thursday, which includes the U.S. CPI report, weekly jobless claims, and the European Central Bank’s policy meeting.

Economic Calendar

The key U.S. economic release yesterday was the Producer Price Index, which came in softer than expected. 

• U.S. Producer Price Index (PPI) (Aug): Headline PPI M/M: -0.1% (vs. +0.3% est.). 
• Headline PPI Y/Y: +2.6% (vs. +3.3% est.). 
• Core PPI M/M (Ex-Food & Energy): -0.1% (vs. +0.3% est.). 
• Core PPI Y/Y (Ex-Food & Energy): +2.8% (vs. +3.5% est.). 
• Wholesale Inventories (July – Revised): +0.1% (vs. +0.2% est.). Sales +1.4%. 

Key risk events for today: 

• U.S. Consumer Price Index (CPI) for August (0.3% vs 0.2% prior).
• European Central Bank (ECB) Rate Decision.
• ECB Press Conference.
• U.S. Weekly Jobless Claims (235K vs 237K prior).

Commodities, Treasuries and Currencies 

Gold prices finished nearly unchanged, with the December futures contract down just $0.20 to settle at $3,682.00 per ounce. The metal saw a volatile session, initially gaining on geopolitical headlines before easing as the market stabilized. Crude oil prices rallied, with the October WTI contract gaining $1.04 (+1.66%) to settle at $63.67/bbl. The gains were driven by the weaker PPI data, which boosted hopes for Fed rate cuts that could stimulate economic activity and, therefore, energy demand. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	1.04	USD/bbl	63.67
Brent	1.1	USD/bbl	67.49
Gold	-0.2	USD/oz	3682
EUR/USD	-0.0008	USD	1.1698
USD/JPY	-0.02	JPY	147.4
10-Year Note	-0.03	%	0.04043

In the currency markets, the U.S. dollar remained under pressure as the soft PPI report increased the odds of a more aggressive Fed easing cycle. The EUR/USD pair held firm around the 1.1700 level ahead of the ECB meeting, while the GBP/USD pair traded steadily above 1.3500. The USD/JPY pair remained in a tight range, consolidating as traders await a clear catalyst from U.S. inflation data. Bitcoin surged over 2%, breaking past the $114,000 resistance level as traders positioned for the CPI report. Treasury yields fell across the curve, with the 10-year yield dropping about 3 basis points to 4.043%, as the soft inflation data supported demand for government bonds.

Looking Ahead 

Today is a major event-driven day for the markets. The U.S. Consumer Price Index (CPI) report at 8:30 AM ET will be the most critical data point of the week, likely determining the market’s conviction regarding the size and scope of the Fed’s expected rate cuts. Simultaneously, the weekly jobless claims report will provide another update on the labor market. Shortly after, the European Central Bank will announce its policy decision, followed by President Lagarde’s press conference, which will be crucial for the direction of the Euro and broader European markets. Expect heightened volatility.