US OPEN: Rebound on Wall Street despite higher Supercore inflation and a jump in yields

The opening of the session on Wall Street brings a clear return of bulls after yesterday's declines. Even though the August CPI inflation report showed persistence in the Supercore indicator (an increase to 3.01% y/y), and the futures market is currently pricing in very high chances of a rate hike by the Fed in September, US stock indices are recovering. The improvement in sentiment is driven by strong cloud results from Oracle and a clear correction in the oil market, which eases concerns about commodity pressure.

Inflationary pressure vs. stock market response

The August CPI inflation reading showed an increase in the headline indicator by 3.4% y/y (0.4% m/m), while core inflation remained at 2.4% y/y (with a monthly reading of 0.3% m/m, slightly higher than forecasted). The main source of concern, however, was the Supercore CPI indicator (services excluding housing), which accelerated to 0.51% m/m, pushing the annual rate to 3.01%.

The debt market's reaction was immediate. Yields on 10-year US Treasury bonds temporarily exceeded 5.0%, after which they stabilized around 4.92%. The futures market rapidly adjusted valuations, estimating the probability of a hawkish Fed move at the September meeting at almost 90%.

Despite higher yields, the stock market is responding with gains, supported by, among other things, a strong drop in oil prices (Brent and WTI are losing over 4.5% today), which limits concerns about a return of the commodity inflation wave.

Situation on major indices:

• US100 (Nasdaq-100): Futures are gaining over 1%, returning above the 29,400 point level. The technology market is trying to continue the rebound after yesterday's weakness, although enthusiasm around some AI companies is moderate.
• US500 (S&P 500): Gaining approx. 0.9% and recording increases to around 7,668 points.
• US30 (Dow Jones): Gaining over 500 points (+0.95%)
• US2000 (Russell 2000): The small-cap index is rising by 0.9%, showing readiness to recover recent losses.

Technical Analysis: US100 (D1)

On the daily chart of the US100 index, an attempt to form a local bottom is visible. Quotes defended the key support zone in the 29,000 pts region for the third time (marked with green arrows), creating a triple bottom structure.

• Resistances: The nearest local resistance for demand remains the 29,635 pts level (green dashed line). A sustained breakout will open the way to the key, medium-term downtrend line (red dashed line), which currently runs in the 30,180 – 30,725 pts region.
• Supports: The first level of defense in case of renewed profit-taking is the 23.6% Fibo retracement around 29,090 pts. The main level validating the demand setup is located in the 28,545 pts support region.

Key company news (Session start)

• Oracle (ORCL.US): Gaining over 2%, but in after-hours trading following the release of Q3 results, the company was gaining as much as 5-6%. Revenue from the cloud infrastructure segment jumped 121% y/y to $7.4 billion due to powerful demand for AI computing power. Despite a very strong opening, the stock price is beginning to give back some gains at the very beginning of the session.
• Adobe (ADBE.US): Losing over 2% in response to the revenue forecast for Q4 ($6.80–6.85 billion), which turned out to be slightly below market consensus ($6.85 billion). This result renewed investors' concerns about growing competition from new AI startups.
• Copart (CPRT.US) / ACV Auctions (ACVA.US): ACV Auctions is rising over 44%, while Copart is gaining only marginally after announcing the acquisition of ACVA by Copart for $1.9 billion in cash.
• Dell Technologies (DELL.US): Shares are rising 7% after RBC Capital Markets initiated coverage of the company with an "Outperform" rating and a target price of $640, citing strong demand for artificial intelligence infrastructure.
• Oklo (OKLO.US) / NuScale Power (SMR.US): Companies in the SMR reactor sector are under pressure. Oklo is falling 6% in connection with filing an application for a possible share issuance of up to $1 billion, while NuScale is losing 9% after UBS downgraded its recommendation to "Sell".