Markets Snap Four-Day Losing Streak as Oil Retreats, But Rate Hike Fears Linger

U.S. stocks bounced back Friday, ending a four-session skid that had been the Dow's longest losing streak since late April. The Dow Jones Industrial Average surged 509 points (0.98%) to close at 52,573, the S&P 500 gained 0.86% to 7,656, and the Nasdaq rose 0.96% to 26,333. Despite the Friday rally, all three major indexes posted weekly losses — the Dow fell 1.6% for the week, the S&P 500 dropped 0.8%, and the Nasdaq slid 0.7%, snapping a two-week winning streak.

The session's relief came largely from retreating oil prices, with West Texas Intermediate dropping 2.4% to settle at $100.05 per barrel and Brent falling 2.8% to $104.61. That pullback came after Iranian state media reported plans for talks with Gulf states in Oman regarding the Strait of Hormuz. Still, WTI surged nearly 10% for the week and Brent nearly 9%, driven by escalating Middle East tensions — including attacks on Saudi Arabia's crucial East-West crude pipeline in the Riyadh and Madinah regions that forced a precautionary shutdown.

Inflation data did little to comfort bond markets. August's Consumer Price Index rose 0.4% month-over-month and 3.4% year-over-year, in line with estimates, but core CPI came in at 0.3% monthly — a tick above forecasts. The 2-year Treasury yield topped 4.6%, its highest since July 2024, while the 10-year yield pushed toward 5%. The CME FedWatch tool showed an 86% probability of a quarter-point rate hike at next week's Fed meeting. Seema Shah of Principal Asset Management argued the Fed is unlikely to stop at one hike, given more than five years of above-target inflation. Meanwhile, consumer sentiment dropped to 47.8 in September from 51.7 in August, with year-ahead inflation expectations jumping to 4.6%.

On the fiscal side, the U.S. budget deficit neared $2 trillion with one month left in the fiscal year, hitting $1.96 trillion cumulative. Net interest on the $40 trillion national debt crossed $1 trillion for the year, with total interest payments reaching $1.27 trillion — the largest budget outlay outside of Social Security. The 30-year Treasury yield edged above 5.36%, breaching what BMO Capital Markets described as Treasury Secretary Scott Bessent's informal ceiling, raising doubts about whether the government's bond buyback program can contain long-end pressure.

Individual stock movers were notable: Hewlett Packard Enterprise and Dell Technologies each surged roughly 11%, with Dell boosted by RBC initiating coverage with an outperform rating, citing AI infrastructure spending tailwinds. Skyworks Solutions jumped over 8% after flagging its Qorvo acquisition on track to close before year-end. Shopify gained nearly 4% on a new Bernstein outperform rating with a $160 target. On the downside, JPMorgan downgraded Chewy to neutral with a $24 target, citing persistent macro headwinds and muted organic growth despite healthy customer metrics.