On Monday, the S&P 500 Index closed down 0.06%, the Dow Jones Industrial Average dropped 0.11%, and the Nasdaq 100 index fell 0.34%. In the futures market, September E-mini S&P futures slipped 0.07%, while September E-mini Nasdaq futures declined 0.30%. The broader market faced pressure from a more than 5% rise in WTI crude oil, which increased inflation expectations and pushed the 10-year Treasury note yield up by 5 basis points to 4.70%.
Cleveland Fed President Beth Hammack indicated a need for future interest rate hikes to address ongoing inflation, stating that current rates are not effectively restricting the economy. Optimism regarding AI spending contributed positively to stocks, particularly after Taiwan Semiconductor Manufacturing Co. reported a 45% year-over-year increase in July sales, indicating sustained demand. Additionally, JPMorgan Chase raised its year-end S&P 500 projection to 8,000, citing stronger earnings and rapid AI monetization as key factors.
As for crude prices, September WTI jumped over 5% amid ongoing tensions related to the Strait of Hormuz. Iranian Foreign Minister Abbas Araghchi claimed they are close to a shipping route deal with Oman, but noted that U.S. sanctions must be lifted first. The market currently anticipates a 52% chance of a 25 basis point rate hike at the upcoming FOMC meeting on September 15-16.
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