NextFin News - U.S. stocks rallied Friday, snapping a four-session losing streak, as falling oil prices and an in-line headline CPI report gave investors room to look past a hotter core inflation reading and a further jump in Fed rate-hike expectations. The session's central tension remained unresolved even as markets celebrated: August's core CPI rose 0.3% month-over-month versus a 0.2% forecast, pushing fed funds futures to price in roughly a 90% probability of a rate hike at next week's FOMC meeting, yet stocks rose anyway on the combination of easing energy prices and a standout earnings reaction from Oracle. Despite Friday's bounce, all three major indexes still finished the week lower, with the Dow posting its biggest weekly decline since March, as this week's surge in oil prices and bond yields left a lasting mark on sentiment heading into next week's Fed decision.
The Dow Jones Industrial Average rose 0.98%
The S&P 500 Index rose 0.86%
The Nasdaq Composite advanced 0.96%
Stock & Sector Performance
Enterprise technology and industrials led the session's gainers. Within the Dow, Cisco Systems was the biggest percentage gainer, rising 4.1%, while Caterpillar contributed the most to the index's point gain, adding roughly 95 points on its own. On the downside, NuScale Power fell 8% after UBS downgraded the stock to Sell from Neutral and cut its price target to $6 from $10, citing competitors moving faster toward construction while NuScale's estimated build timeline of more than five years and lack of firm customer commitments weighed on the outlook. Grocery chain Kroger's shares also declined following the release of its latest earnings report.
Magnificent Seven trading was dominated by Oracle's outsized reaction rather than broad participation across the traditional seven names; reliable closing figures for Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla were not available in today's reporting at publication time. Nvidia CEO Jensen Huang, commenting on the state of AI infrastructure demand, said "the semiconductor industry is going to just keep getting larger and larger," pointing to a new computing layer, new applications, and the end of Moore's Law as durable growth drivers for the sector.
Hot Sectors to Watch
Memory and storage stocks told one of the day's more nuanced stories: an early boost from Oracle's results gave way to profit-taking by the close. Oracle's disclosure that cloud infrastructure revenue — the segment that rents out AI servers — jumped 121% in its fiscal first quarter to $7.4 billion, and that this unit represents the majority of its $664 billion backlog, initially lifted memory names in early trading. But as the session progressed, the group reversed: Seagate Technology fell 4%, SanDisk dropped 3%, and Micron Technology finished roughly flat, as investors took profits following the sector's extraordinary run through 2026. This pattern — an AI-demand-positive headline failing to sustain gains in adjacent hardware suppliers — suggests today's memory-sector move looks more like an early rotation signal than a confirmed extension of the year's dominant uptrend, particularly given how stretched valuations have become after the group's triple-digit percentage gains this year. AI cloud infrastructure, by contrast, showed a more confirmed trend: Oracle's roughly 6% surge extended a pattern of the stock re-rating sharply on backlog and cloud-growth data, a dynamic that has repeated across its last several earnings reports as investors increasingly treat RPO conversion as the key signal for the entire AI infrastructure trade.
Major Story of the Day
Oracle's fiscal first-quarter earnings were the dominant single-company story of the week, culminating in Friday's sharp rally. The company reported adjusted earnings per share of $1.92, up 30% year-over-year and well ahead of the $1.74–$1.75 analyst consensus, on record revenue of $19.35 billion, also up 30% and above the $19.14 billion Wall Street had modeled. The standout metric was Oracle's remaining performance obligation backlog, which reached $664 billion after the company booked more than $30 billion in new AI cloud contracts during the quarter. Management raised its fiscal 2027 guidance to at least $90 billion in revenue and $8.10 in adjusted EPS, while reiterating that full-year capital spending guidance remains unchanged despite the accelerating cloud demand. The market's reaction — one of the stock's sharpest single-session moves in recent memory — reflected a broader re-rating of confidence that Oracle's massive, debt-funded data-center buildout can convert into durable cash generation rather than simply expanding a backlog that investors have grown increasingly skeptical about.
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