The S&P 500 Index ($SPX) (SPY) on Thursday rose +0.65%, the Dow Jones Industrial Average ($DOWI) (DIA) rose +0.13%, and the Nasdaq 100 Index ($IUXX) (QQQ) rose +1.15%. September E-mini S&P futures (ESU26) rose +0.68%, and September E-mini Nasdaq futures (NQU26) rose +1.18%.
Stocks rallied on the favorable PPI report, which prompted a -4 bp decline in the 10-year T-note yield and a drop in expectations for a Fed rate hike in September to 35% from 40% on Wednesday. Stocks also saw support from a drop of more than -2% in crude oil prices, amid a lack of any new US or Iranian military attacks in the Persian Gulf.
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US tech stocks saw carry-over support from an overnight +3.6% rally in the South Korean Kospi index, driven in part by a more than +5% rally in Samsung Electronics and chip-maker SK Hynix. US chip stocks were strong with a +0.8% rally in the iShares Semiconductor ETF. However, US tech stocks were undercut by an -8% drop in Cisco Systems after disappointing guidance and a more than -12% decline in Cerebras Systems (CBRS) due to a decline in sales at its hardware business.
Thursday’s US PPI report was favorable. The July US final-demand PPI report of unchanged m/m and +4.7% y/y was weaker than market expectations of +0.2% m/m and +4.9% y/y. The July core PPI report of +0.2% m/m was weaker than market expectations of +0.3%, although the year-on-year figure of +4.2% y/y was slightly stronger than market expectations of +4.1% y/y. The July PPI of +4.7% y/y was down from May’s 3.5-year peak of +5.9% y/y but was still far above the Fed’s inflation target of +2%.
Thursday’s PPI report followed Wednesday’s favorable July US CPI report, when the July core CPI fell to match the 5.5-year low of +2.5% y/y originally posted early this year. Meanwhile, the nominal CPI fell to +3.4% from June’s +3.5% but remained well above the 5.5-year low of +2.3% posted last year.
Sep WTI crude oil prices (CLU26) fell more than -2% on the lack of any new military strikes in the Persian Gulf region and on reports that the Trump administration is pivoting to using the naval blockade to apply economic pressure on Iran rather than new military attacks. There is no sign of any progress between the US and Iran on an agreement to reopen the Strait of Hormuz, although some ships are still getting through by turning off their transponders and hoping for the best.
An Iranian military spokesperson said Thursday that no ship can safely pass the Strait of Hormuz without Iran’s authorization and supervision and that President Trump’s claims of control over the Strait are “nothing more than lies.” The Iranian statement was in response to President Trump’s comment late Tuesday that the US has “total control over the Hormuz Strait” and that “we own it.”
The outlook for strong Q2 earnings is a bullish factor for stocks. The S&P 500 is tracking for earnings growth of almost 32% in Q2, well above projections of +23%, and nearly four times the average earnings growth rate outside of the Covid period since Q4 of 2013, according to Bloomberg Intelligence. AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500’s earnings-per-share growth in Q2. So far, earnings results have been positive, with 85% of the 446 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data.
The markets are discounting a 35% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16, down from 40% on Wednesday and 51% on Tuesday.
Overseas stock markets closed mixed on Thursday. The Euro Stoxx 50 closed up +0.18%. China’s Shanghai Composite closed down -0.50%. Japan’s Nikkei-225 Stock Average closed up +1.16%.
Interest Rates
September 10-year T-notes (ZNU6) rose +9.5 ticks. The 10-year T-note yield fell -4.4 bp to 4.639%. T-note prices received a boost from the favorable PPI report. Also, the 10-year breakeven inflation expectations rate fell -0.6 bp to 2.260%.
Supply pressures undercut T-note prices as the Treasury sold $35 billion of 30-year T-bonds. The T-bond sale carried an auction yield of 5.216%, the highest since 2001. Investors have recently demanded higher Treasury yields due to the need to finance the US government’s massive budget deficit, high inflation, Fed Chair Warsh’s lack of policy guidance, and market uncertainty about the Fed’s inflation-fighting resolve.
European government bond yields fell. The 10-year German bund yield fell -2.9 bp to 3.131%. The 10-year UK gilt yield fell -1.7 bp to 4.953%.
Markets are discounting a 90% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.
US Stock Movers
The Magnificent Seven all closed higher on Thursday except for Amazon (AMZN), which fell -0.8%. Tesla (TSLA) rose more than +3%, and Meta (META) rose more than +2%.
Chip stocks were mostly higher, with the iShares Semiconductor ETF (SOXX) closing up +0.8%. Chip leaders included Micron Technology (MU), up more than +4%, and Intel (INTC) and Lam Research (LRCX), both up more than +3%.
Cisco Systems (CSCO) fell more than -8% after disappointing guidance related to AI-tied networking gear sales.
Cerebus Systems (CBRS) fell more than -12% after delivering disappointing guidance of $215 million in Q3. The sell-off came despite the report that revenue from its cloud division nearly quadrupled to $127.7 million, exceeding its hardware business. The company designs and sells chips and also offers cloud computing.
Salesforce (CRM) rallied more than +4% after JPMorgan rated the company overweight, saying that AI-Saas implications for the company are overblown.
StubHub (STUB) fell more than -10% after a disappointing earnings report.
JD.com’s US-listed ADR (JD) fell more than -7% after the Chinese online retailer reported a quarterly revenue decline, the first since it went public in 2014.
Vail Resorts (MTN) fell -2% after Goldman Sachs initiated coverage with a sell rating.
Earnings Reports (8/14/2026)
Liberty Live Holdings (LLYVK).
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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