A hot core CPI print last week turned a September rate hike from a coin flip into the base case. By Friday, CME FedWatch put the odds of a 25 basis point hike at 87.3%, and the Fed announces its decision on Wednesday.
Oil was the other big move. Crude cleared $100 for the first time since May on the Iran conflict, gave back $6 in a single day on hopes for a shipping deal, and still closed the week at 100.05. Bitcoin slid to $77,740 over the same stretch.
Two events land before the Fed. Gulf states meet with Iran on Monday about reopening the Strait of Hormuz, which could move oil, and the Senate holds a procedural vote on crypto legislation Tuesday, which could move Bitcoin. Friday is quadruple witching.
Last week’s scorecard
| Market | Open | Close | Change |
|---|---|---|---|
| ES | 7,715.50 | 7,659.50 | -0.73% |
| NQ | 29,535.25 | 29,387.00 | -0.50% |
| CL | 92.26 | 100.05 | +8.44% |
| GC | 4,466.50 | 4,408.90 | -1.29% |
ES broke below the prior week’s support, then recovered enough to close near its August support. NQ fell to the support it has held for two weeks and bounced, though it still finished red. Small caps looked worse: RTY lost the prior week’s lows and closed right at July support. YM also closed lower and is drifting toward its July lows.
GC tested last week’s support and bounced but still closed down. CL ran to just under 104.50 on rising Middle East tensions, pulled back a little, and held above 100 into the close.
Sectors
Nothing really led. Energy topped the table at close to 1%, and Technology came in second at 0.75%. Communication Services and Industrials finished just below flat. Utilities and Consumer Defensive were down more, followed by Financials and Real Estate, then Consumer Cyclical and Basic Materials. Healthcare was the worst sector by a wide margin, down nearly 4.7%.
Inflation gave the Fed mixed signals
PPI tracks what producers get paid for goods and services, and CPI tracks what consumers pay. The headline number includes everything. Core strips out food and energy, which swing on things like weather and oil supply, so the Fed treats core as the better read on the underlying trend.
| Report | Actual | Forecast |
|---|---|---|
| PPI (MoM) | 0.4% | 0.4% |
| Core PPI (MoM) | 0.2% | 0.3% |
| PPI (YoY) | 5.4% | 5.3% |
| CPI (MoM) | 0.4% | 0.4% |
| CPI (YoY) | 3.4% | 3.4% |
| Core CPI (MoM) | 0.3% | 0.2% |
Producer prices were mixed. Core PPI came in cooler than expected, while the annual rate ran a tenth hot. Consumer prices are what moved the market. Headline CPI matched forecasts, but core rose 0.3% for the month against a 0.2% forecast, pushed up by shelter and gas. The annual core rate eased to 2.4%, and the market mostly ignored that.
After the CPI release, FedWatch jumped to an 87.3% chance of a 25 basis point hike at this week’s meeting. Earlier in the week the odds were close to even.
Why a hike matters for what you trade
A hike raises borrowing costs for banks. Banks, Treasuries, and money market funds then compete harder for cash by paying savers and buyers more, which pulls money into dollars and strengthens the dollar.
A stronger dollar usually pressures gold. Gold pays no yield, and it gets more expensive for foreign buyers when the dollar rises. Higher rates also make borrowing more expensive for companies and consumers, which tends to weigh on the indices.
Headlines from last week
Nike drops out of the S&P 100
Nike (NKE) leaves the S&P 100 before the open on Monday, September 21, after 18 years in the index. The stock sits near a 12-year low, roughly 78% below its 2021 peak. Honeywell Aerospace (HON), Simon Property Group (SPG), and Colgate-Palmolive (CL, the stock, not crude futures) are leaving this quarter too. Dell (DELL), Palo Alto Networks (PANW), Arista Networks (ANET), and SanDisk (SNDK) take their places.
Memory chips led the AI rally
Micron (MU) and SanDisk (SNDK) pushed semiconductors higher after Samsung warned the memory shortage could last into 2028. Dell added to it by disclosing a $95 billion AI server backlog, which points to more demand for DRAM and NAND.
Apple shows its first foldable
Apple (AAPL) unveiled the iPhone Duo at its September 9 event. It starts at $1,999, with a 5.4-inch outer screen and a 7.6-inch inner screen, and pre-orders open October 16. It’s the first major launch under new CEO John Ternus.
Intel jumps on a price hike report
Intel (INTC) rose about 9% after DigiTimes reported the company plans to raise PC processor prices another 10% in October. Production capacity is tight, and Intel has been moving toward higher-margin products.
The DOJ looks at Nvidia’s Groq deal
The Justice Department is investigating whether Nvidia (NVDA) structured its $17 to $20 billion licensing deal with AI chip startup Groq to avoid antitrust review. Nvidia licensed Groq’s chip technology on a non-exclusive basis and hired its founder, but it never formally acquired the company.
Earnings recap
Beats didn’t guarantee a rally last week. Three retailers leaned on tariff refunds to top estimates, and most of the names below sold off after reporting.
- Chewy (CHWY): met on profit and edged past on sales, with net sales up 7.3% to $3.33 billion. The market read it as a low-quality beat, helped by one-time tariff refunds and the timing of vendor rebates. Chewy raised full-year sales guidance, and the shares fell anyway.
- Academy Sports + Outdoors (ASO): beat on profit, with tariff refunds padding margins. Sales grew a modest 3% while comparable sales slipped. The stock jumped.
- American Eagle Outfitters (AEO): a big profit beat that came almost entirely from a tariff refund. Aerie surged, but comps at the core American Eagle brand fell. The company raised full-year guidance, and shares still dropped as investors questioned the quality of the beat.
- Oracle (ORCL): beat on profit and sales on fast growth in cloud infrastructure revenue, and raised its full-year outlook. The stock popped after hours, then faded through the next session on worries about how much it’s spending on AI.
- Adobe (ADBE): beat estimates, raised full-year guidance, and crossed 1 billion monthly active users. Shares fell after hours on concerns about how quickly Adobe is making money from AI.
- Kroger (KR): beat on adjusted profit but came in just short on revenue. Same-store sales barely grew, held back by a Cyclospora outbreak and pharmacy pressure from Medicare drug pricing changes. Kroger cut its same-store sales guidance, kept its EPS guidance, and the stock fell.
The week ahead
Earnings season is mostly over, so the calendar is about the Fed and the data. The few reports left are still useful reads on the consumer, housing, and China.
Monday, September 14
- Iran talks: Gulf states meet with Iran to discuss reopening shipping through the Strait of Hormuz. A deal could pull oil lower. A breakdown could send it higher.
- Hain Celestial (HAIN) before the open, for a read on premium food spending.
- Dave & Buster’s (PLAY) after the close, for a read on discretionary spending.
Tuesday, September 15
- Senate crypto vote: a procedural vote on the CLARITY Act. Progress could lift Bitcoin, and another stall could weigh on it.
- Trip.com (TCOM) after the close, for a read on China’s economy.
Wednesday, September 16
- Retail Sales and Core Retail Sales (August, MoM)
- Crude Oil Inventories
- FOMC: rate decision, statement, economic projections, and the press conference
- Lennar (LEN) after the close, for a read on housing demand
Thursday, September 17
- Initial Jobless Claims
- Philadelphia Fed Manufacturing Index (September)
Friday, September 18
- Quadruple witching: stock options, single-stock futures, index options, and index futures all expire on the same day. It’s usually the heaviest volume session of the quarter.
Iran and the Red Sea
The Iran conflict opened a second front last week. Iran-backed Houthi forces captured the Yemeni port of Mocha and the island of Perim, giving them effective control of Yemen’s Red Sea coast near the Bab el-Mandeb Strait. Saudi Arabia also shut down its East-West oil pipeline after a drone strike.
That puts two shipping chokepoints in play, Hormuz and Bab el-Mandeb. More strikes on shipping or oil infrastructure would tighten crude supply and add volatility, which is why Monday’s talks matter for the rest of the week.
What we’re watching
With hike odds at 87.3%, a hike on Wednesday wouldn’t surprise many people. A hold would. Either way, the projections and the press conference will tell us how many more hikes the Fed has in mind, and that’s what CL, GC, and the indices will trade on. Two days later, quad witching adds the heaviest volume of the quarter on top of whatever the Fed started.
This weekly market preview is for educational purposes only. It is not financial advice and not a recommendation to buy or sell any security. Options carry significant risk — trade your own plan and manage your risk. Want the watchlist and alerts in real time? Join Theta Warrior Elite.
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