Escalation in Middle East by U.S., Iran and Houthis Sends WTI Futures over $104; August CPI Reported as +0.4%, 3.4% Annual, Core at 2.4%

Stocks spilled lower for a fourth consecutive day on Thursday as the BLS released August PPI with a reading of +0.4% month-over-month and an annualized figure of 5.4% and military activity escalated in the Middle East.

While the headline and core numbers were in line with Wall Street expectations, there was no doubt about the discretion of traders, who continued the selling of equities. Also contributing to the general unease were long-dated treasury issues reaching multi-year high yields.

Yield on the 10-year note soared to 4.94% while the 30-year bond checked in at 5.36%, the gains related to a general consensus that Friday's CPI numbers would be high enough to prompt the Federal Reserve to raise the federal funds rate by at least 25 basis points at its upcoming meeting next week (Sept. 15-16).

Crude oil futures were at the highest levels since May, with Brent approaching $110/barrel and WTI crude topping $104 overnight. As morning approached in Europe, prices eased slightly as demand destruction and a driving slowdown in the U.S. became the dominant meme.

For the week, stocks have not fared well. Through the three days closing on Thursday, the Dow had shed some 1350 points, the NASDAQ was down 425, and the S&P 500 was off 126 points.

Stock futures pointed to a higher open as all eyes turned to the BLS release of August CPI at 8:30 am ET.

The hope was that CPI would come in at a somewhat tame 0.2% for the month, which might influence the FOMC to continue their pause on interest rates, keeping the federal funds target rate at 3.50-3.75%.

Wall Street's fears were realized when the BLS announced August CPI at a staggering +0.4%.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent on a seasonally adjusted basis in August after rising 0.1 percent in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.4 percent before seasonal adjustment.

The index for gasoline rose 3.9 percent in August, accounting for over one third of the monthly all items increase. The index for energy increased 2.1 percent over the month. The shelter index rose 0.3 percent in August after rising 0.1 percent in July. The index for food increased 0.1 percent over the month, as the index for food away from home increased 0.3 percent.

The index for all items less food and energy rose 0.3 percent after increasing 0.2 percent in July. Indexes that increased over the month include communication, lodging away from home, airline fares, education, and used cars and trucks. Conversely, the index for medical care and the index for motor vehicle insurance were among the major indexes that decreased in August.

The all items index rose 3.4 percent for the 12 months ending August as it did for the 12 months ending July. The all items less food and energy index rose 2.4 percent over the year, following a 2.5-percent increase over the 12 months ending July. The energy index increased 16.3 percent for the 12 months ending August. The food index increased 2.7 percent over the last year.

The announcement sent stock futures sharply lower, but then rebounded as core CPI fell from 2.5 to 2.4%, the lowest in more than five years.

With the general perception that the CPI figure would surely cause the FOMC to raise rates, it remains to be seen how the cash market will respond to close out what has been a troubling week.

At the Close, Thursday, September 10, 2026:
Dow: 52,064.10, -316.56 (-0.60%)
NASDAQ: 26,081.73, -171.62 (-0.65%)
S&P 500: 7,591.70, -44.66 (-0.58%)
NYSE Composite: 24,140.65, -170.50 (-0.70%)