Wall Street Rebounds as Oil Retreats, CPI Data Calms Rate Jitters

U.S. stocks rallied sharply on Friday, halting a four-session decline as a pullback in oil prices and a closely watched inflation reading that matched forecasts offered relief to investors.

The S&P 500 rose 1%, the Dow Jones Industrial Average gained 644.81 points, or 1.24%, to 52,713.39, and the Nasdaq Composite added 1.05%, according to NDTV Profit. The Dow’s four-day losing streak had been its longest since late April, the outlet reported. Despite the gains, the major indexes closed lower for the holiday-shortened week, Investopedia noted.

**Oil prices cool**

Crude retreated from multi-month highs, removing a key source of upward pressure on prices across markets. Brent crude fell 3.1% to $104.32 a barrel, while West Texas Intermediate declined 3% to $99.28, NDTV Profit reported. Brent had approached $110 overnight before falling 2.5% to $104.93, according to Times of India. Both benchmarks remained on track for weekly gains of around 8%, NDTV Profit added.

The decline followed a surge earlier in the week amid Middle East tensions and concerns about supply through the Strait of Hormuz. The International Energy Agency warned that higher prices would hurt consumption, NDTV Profit noted in a separate report.

**Inflation data in line**

The August consumer price index (CPI) showed prices rising 0.4% from July and 3.4% year over year, matching Dow Jones estimates, NDTV Profit reported. Core CPI, excluding food and energy, increased 0.3% month over month, slightly above expectations. Times of India also reported the 3.4% annual figure, calling it close to economists’ forecasts.

The data reinforced expectations that the Federal Reserve will raise its benchmark interest rate at next week’s policy meeting. According to the CME Group’s FedWatch tool, markets placed an 85.6% probability on a 25-basis-point hike, NDTV Profit said. Higher rates are used by the Fed to curb inflation by making borrowing more expensive, Times of India explained.

Treasury yields reflected the rate expectations. The two-year yield, sensitive to Fed policy changes, rose to 4.60% from 4.56% late Thursday, hitting its highest level since July 2024, NDTV Profit and Times of India reported. The 10-year yield, however, fell to 4.93% from 4.95%, suggesting bond investors may view future rate increases as effective in containing long-term inflation, Times of India said.

**Consumer sentiment slips**

The inflation picture was accompanied by weakening consumer confidence. A preliminary University of Michigan report showed U.S. consumer sentiment fell on Friday, with declines among both Democrats and Republicans, Times of India reported. Consumers’ expectations for inflation over the coming year rose to 4.6% from 4% last month — the highest reading since June — a concern for the Fed because rising expectations can fuel further price increases.

**Futures hinted at rebound**

Before the open, futures indicated a positive session. Nasdaq futures climbed 0.56%, Dow Jones futures advanced 0.54%, and S&P 500 futures rose 0.49% by 6:06 a.m. ET, NDTV Profit reported in a premarket article. Polymarket odds predicted a 64% chance the S&P 500 would open higher, according to Benzinga.

Single-stock movements also supported sentiment. Oracle shares jumped 5.5% in premarket trading after the company reported better-than-expected fiscal first-quarter earnings and disclosed over $30 billion in new AI cloud contracts, pushing its remaining performance obligations to a record $664 billion, NDTV Profit reported.

**Global markets diverge**

The recovery was not uniform across global markets. European stocks rose as oil eased, with London’s FTSE 100 gaining 0.5% after data showed the UK economy stronger than expected in July, Times of India reported. Asian markets fell, with Japan’s Nikkei 225 declining 1.9% and South Korea’s Kospi losing 1.8%.