Lead
On Sept. 9, 2025 in New York trading, the S&P 500 climbed to a fresh intraday record as an unexpected drop in wholesale prices bolstered hopes for an imminent Federal Reserve rate cut. The broad market index rose about 0.5% while the Nasdaq matched that gain; the Dow fell roughly 216 points, or 0.5%. Investors cheered a Bureau of Labor Statistics report showing producer prices fell 0.1% in August and a blockbuster Oracle forecast tied to AI growth that sent its shares sharply higher. The twin developments shifted odds toward easier policy and reignited interest in AI-related stocks.
Key Takeaways
- The Producer Price Index (PPI) fell 0.1% in August versus a Dow Jones consensus of a 0.3% gain, and core PPI also declined 0.1% against a 0.3% expected rise.
- The S&P 500 and Nasdaq each rose about 0.5% on the session while the Dow lost 216 points, or roughly 0.5%.
- Traders using the CME FedWatch tool priced in near certainty of a 25 basis-point Fed cut at the September meeting and increased odds of a 50 basis-point move after the PPI release.
- Oracle reported multicloud database revenue growth of 1,529% tied to deployments at Amazon, Google and Microsoft and issued a long-term cloud infrastructure revenue forecast that spurred a more-than-40% intraday surge in its stock.
- Nvidia and AMD climbed as investors rotated back into AI-related names; broader sector flows reflected renewed appetite for AI infrastructure exposure.
- Market attention shifts to Thursday’s consumer price index (CPI) report, where economists expect a 0.3% monthly increase that would lift annual headline CPI to 2.9% and keep core CPI near 3.1%.
Background
Since early 2024 the Federal Reserve has signaled a careful, data-dependent approach to policy. Markets have been pricing eventual easing but the timing and size of cuts have depended on fresh inflation readings and the labor market. Producer prices are a timely indicator of input-cost pressure and can influence the Fed’s view of underlying inflation momentum ahead of headline CPI releases.
At the same time, large technology firms have been reorienting capital spending toward AI infrastructure, particularly GPU-driven cloud services. Legacy enterprise software companies such as Oracle have attempted to reframe growth narratives around cloud and AI offerings; forecasts showing outsized cloud revenue expansion can alter market expectations for future profitability and investment flows.
Main Event
The Bureau of Labor Statistics’ August PPI report, released on Wednesday, showed a 0.1% decline in wholesale prices month over month, defying the Dow Jones median estimate of a 0.3% increase. Core PPI — which strips out food and energy — also fell 0.1% against expectations of a 0.3% rise. The softer-than-expected print immediately reduced near-term inflation concerns and bolstered bets on Fed easing.
Markets reacted quickly: the S&P 500 and Nasdaq touched new intraday highs as yield-sensitive sectors rallied and AI-related names gained. The Dow underperformed, weighed down by a handful of large industrial and financial names, contributing to a roughly 216-point drop by the close.
Oracle’s quarterly report and forward guidance dominated headlines. The company disclosed that multicloud database revenue from Amazon, Google and Microsoft grew 1,529% in the quarter and offered a long-range projection for cloud infrastructure revenue of $144 billion in fiscal 2030, up from $10.3 billion in fiscal 2025. Oracle’s stock surged intraday by more than 40% after the forecast, drawing renewed investor focus on GPU-as-a-Service and multicloud demand.
Other market movers included Nvidia and AMD, which rose as investors redeployed capital into AI infrastructure plays. Crypto-linked names and tokens such as Solana also showed strength in parallel institutional flows, underscoring a broader risk-on tilt into technology and digital-asset strategies.
Analysis & Implications
The PPI decline complicates the Fed’s calculus by reducing near-term evidence of sustained input-driven inflation. If the subsequent CPI print matches current consensus (0.3% monthly), it would still move annual headline CPI to about 2.9% but leave core inflation near 3.1%. Policymakers will weigh those readings against labor-market strength; softer inflation increases the probability of an earlier or larger easing than previously expected.
Market-implied probabilities have already adjusted: futures show essentially full pricing for a 25 basis-point cut and elevated odds of a 50 basis-point move. That shift can support equities broadly but raises questions about cross-asset positioning if the Fed surprises on either side. Rapid repricing can also amplify volatility in rate-sensitive sectors and weigh on banks if net-interest-margin expectations adjust downward.
Oracle’s outsized cloud forecast — and the 1,529% multicloud database growth figure — is a signal that large enterprise cloud vendors and hyperscalers are monetizing AI infrastructure more aggressively than many analysts anticipated. If Oracle can sustain high-margin GPU-as-a-Service revenue, it could reshape competitive dynamics among cloud providers and chip vendors. But execution risk is material: capital intensity for data-center growth, customer concentration, and long lead times for large infrastructure deals all create uncertainty.
For investors, the immediate implication is a renewed bifurcation: strong performance for AI infrastructure and software names versus more cyclical, rate-sensitive sectors. Policy sensitivity remains high—markets will look to CPI, payrolls and Fed communications to judge whether recent pricing moves are durable.
Comparison & Data
| Metric | Aug Report | Dow Jones Estimate |
|---|---|---|
| PPI (headline, m/m) | -0.1% | +0.3% |
| Core PPI (m/m) | -0.1% | +0.3% |
| Expected CPI (Sep, m/m) | +0.3% (consensus) | — |
The table shows the key surprise: both headline and core producer prices undershot forecasts by about 0.4 percentage points. Producer prices lead consumer prices and so a negative PPI print tends to lower odds of persistent upside surprises in CPI. Still, CPI is the primary data point the Fed watches, so the market will pay close attention to Thursday’s report for confirmation.
Reactions & Quotes
This number now, if the Fed is truly data dependent, the question should be, ‘Why not 50?’
Mohamed El-Erian, Allianz (commentary on CNBC)
El-Erian summarized why some market participants immediately upgraded expectations for a larger cut after the PPI miss, citing softer employment and inflation signals.
“Ramping capex was holding us back, since visibility on ROI for growing capex was lacking…the outlook for OCI revenue alone (51% 4-year CAGR) suggests a step function in demand.”
Brad Sills, Bank of America (analyst commentary)
Sills’ comment explains why some analysts raised Oracle price targets after management highlighted rapid cloud infrastructure growth; the view links increased capex with improved revenue visibility for OCI.
Unconfirmed
- Whether Thursday’s CPI will match consensus (0.3% m/m) remains uncertain until the BLS release; market reactions could be materially different if CPI surprises to the upside.
- Oracle’s long-range $144 billion cloud forecast depends on multi-year execution and demand assumptions that are not independently verifiable today.
- Market pricing implying a 50 basis-point Fed cut is contingent on a sequence of weak data; it is not a Fed commitment and could change rapidly.
Bottom Line
Wednesday’s session underscored how quickly markets can reprice policy odds and sector leadership when fresh inflation data and company forecasts arrive together. A surprisingly soft PPI print reduced immediate inflation pressure, pushing markets to favor earlier Fed easing and lifting risk assets, particularly AI-related names.
Investors should watch Thursday’s CPI print, upcoming payroll data and Fed communications for confirmation. For corporate watchers, Oracle’s aggressive cloud guidance merits close scrutiny: if realized, it would accelerate the AI infrastructure narrative; if not, investors may reassess the valuation premium assigned to legacy vendors pivoting to AI.