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Briefing.com Summary:
*Oracle is soaring on news of its RPO standing.
*August PPI report helps temper inflation worries ahead of August CPI report.
*Pharmaceutical companies to face new requirements for TV and social media advertising.
Oracle (ORCL) has a market capitalization of approximately $680 billion, yet it is trading this morning as if its market capitalization is just $680 million. Shares of ORCL are trading 31% higher in pre-market action, which is an extraordinary move for a company that size but which meshes with the company's extraordinary remaining performance obligations ("RPO") update.
The latter, up 359% year-over-year to $455 billion, completely overshadowed the company's modest misses on EPS and revenue for its fiscal first quarter. That massive increase has injected an added dose of enthusiasm in the AI growth trade that is providing some added uplift for the equity futures market.
Currently, the S&P 500 futures are up 33 points and are trading 0.6% above fair value, the Nasdaq 100 futures are up 131 points and are trading 0.6% above fair value, and the Dow Jones Industrial Average futures are unchanged and are trading in line with fair value.
The Oracle report isn't the only source of this morning's strength, however. The Producer Price Index for August is another key source.
The index for final demand decreased 0.1% month-over-month in August (Briefing.com consensus: 0.3%) following a downwardly revised 0.7% increase (from 0.9%) in July. Excluding food and energy, the index for final demand was also down 0.1% month-over-month (Briefing.com consensus: 0.3%) following a downwardly revised 0.7% increase (from 0.9%) in July.
On a year-over-year basis, the index for final demand was up 2.6%, versus 3.1% in July, while the index for final demand, excluding food and energy, was up 2.8%, versus 3.4% in July.
The key takeaway from the report is that it will ease the market's angst about pass-through effects for consumers, especially with the index for final demand services sliding 0.2% month-over-month. The added takeaway is that this report will keep the market locked on its view that there will be at least 75 basis points of rate cuts by the Fed before the end of the year.
The 2-yr note yield is down one basis point to 3.53%, while the 10-yr note yield is unchanged at 4.07%. Those are seemingly muted responses to this encouraging inflation data, yet the Treasury market and the fed funds futures market have been frontrunning (so to speak) with their rate cut expectations.
The August Consumer Price Index will be released at 8:30 a.m. ET tomorrow.
In other developments, a U.S. District Court judge ruled that President Trump, for now, cannot fire Fed Governor Lisa Cook for cause. That ruling is expected to be appealed to the Supreme Court, which has other administration matters on its hands. Specifically, the Supreme Court announced that it will hear the administration's appeal of the tariff ruling on a fast-track timeline. Oral arguments are expected the first week of November.
President Trump called on the EU to levy tariffs up to 100% on China and India because of their continued purchases of Russian oil. Meanwhile, he signed a memo that will hold pharmaceutical companies more accountable for necessary product risk disclosures in their advertising on TV and social media.
