The stock market ended a brief rally on Friday but could not reverse its losses for the week, weighed down by surging oil prices and bond yields that reignited inflation concerns. The Dow Jones Industrial Average, S&P 500, and Nasdaq each gained nearly 1% on Friday, breaking a four-session losing streak, though they still posted weekly declines. The Dow led the drop with a 1.6% loss, while the S&P 500 and Nasdaq fell 0.8% and 0.7%, respectively.
Geopolitical tensions between the United States and Iran pushed West Texas Intermediate crude above $100 a barrel on Thursday, marking its highest level in nearly four months. Despite a pullback on Friday, WTI rose more than 9% for the week. Meanwhile, the yield on the 10-year Treasury climbed above 4.95% on Thursday, the highest point since October 2023. Investors fear that escalating energy costs could keep inflation sticky, potentially forcing the Federal Reserve to raise interest rates at its upcoming meeting.
Recent inflation data reinforced the likelihood of a rate hike. The producer price index rose 0.4% in August, matching expectations, while the consumer price index showed headline inflation increasing 0.4% month-over-month and 3.4% year-over-year. Core CPI, excluding food and energy, rose 0.3%, slightly exceeding forecasts. These figures represent the final major inflation reports before the Fed convenes on September 15-16. According to CME FedWatch data, market expectations for a September rate hike jumped to 87% from 58% the previous week, with some traders also pricing in a second increase by year-end.
Amid the macroeconomic uncertainty, two companies featured in the portfolio demonstrated strong potential driven by artificial intelligence innovations. Meta Platforms recently unveiled its Muse Spark 1.3 model, described as a credible competitor to frontier systems from OpenAI and Anthropic. This was followed by the launch of Muse, a personal AI agent integrated across Facebook, Instagram, and WhatsApp, giving it access to 3.6 billion daily active users. These developments suggest that Meta’s significant AI investments are generating valuable, monetizable assets. Despite this progress, Meta trades at approximately 19 times 2027 earnings estimates, a multiple that may not fully reflect expected 20% revenue growth in its core business. Jim Cramer has highlighted Meta as a top choice among the Magnificent Seven, noting that the company’s extensive computing infrastructure could also serve as a future cloud revenue stream. Meta shares rose 5% last week.
Apple also returned to the spotlight with the introduction of the iPhone Duo, a foldable device starting at $1,999. Cramer noted the product carried a genuine “wow factor,” offering a novel form factor rather than a standard incremental upgrade. The company also announced the iPhone 18 Pro and Pro Max, which come with hardware enhancements and $100 price increases to offset rising memory costs. Apple stock gained nearly 4% for the week. Looking further ahead, new CEO John Ternus positioned the iPhone as an “intelligent personal hub,” featuring an AI-enhanced Siri capable of interacting with over 300,000 apps. This move places Apple directly in the competitive landscape for personal AI agents, alongside rivals like Meta’s Muse and SpaceX’s Grok. Analysts suggest that consumers may adopt multiple agents for different tasks, and Apple’s advantage lies in its deep integration of AI into devices already central to hundreds of millions of users’ daily routines.
Oil above $100 is the real threat here. Nothing else matters if gas keeps climbing.
Finally, a foldable phone that isn’t just a gimmick! The Duo sounds intriguing for power users.
87% chance of a rate hike is staggering. I’m staying on the sidelines until the Fed speaks.
$100 price hikes on the iPhone 18 Pro? Sounds like Apple is testing how much we can tolerate right now.
Inflation fears are real, but Meta’s AI push looks genuinely transformative. Hope the market catches on soon.