CPI Report, Oracle Earnings, Trump Cash Promises and More in Morning Squawk
The CPI report is taking center stage on Wall Street as investors assess the outlook for inflation, interest rates and the Federal Reserve’s upcoming policy decision. Stock futures moved higher Friday morning after all three major U.S. averages closed lower in the previous session, with investors also tracking oil prices, corporate earnings and developments in artificial intelligence.
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The latest inflation data showed that consumer prices continued to rise in August, although the headline figures largely matched expectations.
CPI Report Keeps Fed in Focus
The consumer price index increased 0.4% in August and was up 3.4% from a year earlier, according to the latest government data. Both readings were broadly in line with economists’ expectations.
However, the core CPI measure, which excludes volatile food and energy prices, increased 0.3% during the month, slightly above expectations.
The report is particularly important because it represents one of the Federal Reserve’s final major inflation readings before its policy decision next week.
The inflation figures followed Thursday’s producer price index report, which showed producer prices rising 0.4% in August. The annual producer-price increase accelerated to 5.4%, slightly exceeding forecasts.
Energy prices have emerged as an important source of inflationary pressure. Diesel prices in the producer-price index jumped 24.1%, while U.S. crude oil prices surged roughly 4% Thursday, pushing above $100 a barrel again. U.S. diesel prices also reached a record of approximately $6 per gallon overnight.
The combination of stronger producer inflation and higher oil prices had prompted traders to increase bets on a quarter-point Federal Reserve rate hike next week, with the probability moving above 70%.
Markets are now digesting the CPI report to determine whether those expectations will hold.
Oracle’s AI Boom Comes With a Heavy Price
Oracle shares climbed around 7% in premarket trading after the technology company reported stronger-than-expected earnings and exceptionally strong cloud growth.
Overall revenue increased nearly 30% to $19.35 billion, while cloud revenue jumped 62% to $11.61 billion. Cloud infrastructure revenue more than doubled, highlighting the growing demand for computing capacity associated with artificial intelligence.
But the rapid expansion is requiring enormous investment.
Oracle spent approximately $28.5 billion on capital expenditures during the latest quarter, more than three times its spending a year earlier. The company also reported $5.4 billion in negative free cash flow and now carries roughly $125 billion in debt.
Despite those concerns, demand for Oracle’s infrastructure remains strong.
The company ended the quarter with approximately $664 billion in remaining performance obligations, representing contracted future revenue. Oracle also said it signed more than $30 billion in additional AI contracts during the quarter.
The figures underscore the enormous capital requirements of the AI infrastructure race, while also showing why investors remain willing to reward companies positioned to benefit from the technology boom.
Trump’s $5,000 Dividend Faces Questions
President Donald Trump’s latest proposal to put cash directly into Americans’ hands is generating questions over its cost, effectiveness and legal basis.
Trump said Wednesday that every adult U.S. citizen would receive a $5,000 “dividend” if Republicans retain control of both chambers of Congress in November.
The proposal could cost more than $1.2 trillion and has already attracted criticism from Democrats as well as some conservatives.
It has also raised legal questions because Trump explicitly linked the proposed payments to the outcome of an election.
A separate White House announcement on Thursday involved a more immediate payment. The administration said nearly 1 million people would begin receiving $500 Obamacare refunds starting in October.
Health-policy experts, however, said those payments would cover only a fraction of the additional costs faced by some households following the expiration of enhanced Affordable Care Act subsidies.
Together, the proposals put renewed attention on government spending, household finances and the political debate over direct payments ahead of the midterm elections.
OpenAI Takes Aim at Wall Street’s Junior Work
OpenAI is expanding deeper into financial services with a new version of ChatGPT designed for the financial industry.
The company unveiled ChatGPT for Financial Services Thursday, a tailored enterprise product developed with financial-sector design partners including Morgan Stanley and Evercore.
The system can assist with tasks such as researching companies, analyzing financial information and creating presentations — activities that have traditionally formed a significant portion of the workload assigned to junior investment bankers.
OpenAI says the technology is intended to increase productivity rather than eliminate banking jobs.
But its introduction raises a broader question for Wall Street: What happens to the traditional apprenticeship model if AI takes over much of the work that junior bankers previously performed?
Research, financial analysis and pitchbook preparation have historically helped young bankers develop the skills required to become senior dealmakers.
If those responsibilities increasingly move to AI systems, investment banks may need to rethink how they train and develop future generations of financial professionals.
25 Years After 9/11, Airport Security Evolves
Friday also marks 25 years since the September 11, 2001 terrorist attacks, which fundamentally changed air travel and airport security in the United States.
Some restrictions introduced or reinforced in the years following the attacks are now beginning to loosen.
Travelers passing through regular security checkpoints can now keep their shoes on, reversing a restriction associated with heightened security measures following the failed 2001 “shoe bomber” attack.
