Oracle skyrocketed on a huge cloud backlog, giving a lift to AI stocks broadly. Taiwan Semiconductor sales and a huge Nebius contract with Microsoft also bolstered AI optimism. Inflation reports and other economic data reinforced expectations of a quarter-point Fed rate cut next week. Apple fell solidly as its iPhone 17 event held few surprises. Synopsys and Rubrik were big earnings losers.
Stock Market At Record Highs
The stock market showed broad strength, with the Dow Jones, S&P 500 and Nasdaq composite all hitting record highs, now clearly above recent ranges. The small-cap Russell 2000 set a nine-month best. Oracle fueled AI stocks while markets are locked in on a quarter-point Fed rate cut on Sept. 17. Treasury yields tumbled on Fed bets.
Economic Data Back Rate-Cut Case
The past week's economic releases featured downbeat labor market data and not-so-bad inflation news, a combination that should deliver multiple Fed rate cuts this year. Jobless claims jumped 27,000 to a nearly four-year high of 263,000, though one week of data, especially the short Labor Day week, isn't cause for alarm. The jump mostly came in one state: Texas. The Bureau of Labor Statistics revised down payroll gains for the year through March by 911,000, cutting average monthly growth to 73,000 from 149,000. The consumer price index showed some pass-through of Trump tariffs in August. Core inflation rose 0.3%, as new vehicle prices rose 0.3%, apparel 0.5%, TVs 2% and sewing machines 9% from July. But the parts of the CPI and PPI that comprise the Fed's primary inflation rate, the core PCE price index, point to a modest 0.2% increase, thanks to lower airfares.
Oracle Skyrockets On AI Backlog
Oracle rocketed 41% Wednesday, its best one-day gain since 1992, following its fiscal Q1 results. EPS and sales fell short, but Oracle said it ended August with a cloud backlog worth $455 billion in contracted revenue, a 359% jump from a year earlier. Oracle's collaboration with OpenAI is a major source of its backlog, with the Wall Street Journal reporting that the ChatGPT creator is contracted to spend $300 billion on Oracle's cloud over five years. Oracle also upped its forecast for cloud infrastructure revenue. Oracle stock has now more than doubled in value since the start of the year. Chairman Larry Ellison, meanwhile, has nearly surpassed Elon Musk as the world's richest man, according to Bloomberg. Oracle's bullish guidance lifted the AI sector.
Apple iPhone 17 Reveal Nothing To Phone Home About
Thanks to news leaks, the Apple iPhone 17 unveiling was a surprise-free event. As expected, the company added an ultraslim handset to the lineup with the iPhone Air. The standard and Pro models of the iPhone 17 received improved processors, cameras, displays and battery life. New Apple Watch smartwatches and AirPods Pro wireless earbuds were introduced. Save for live language translation on the AirPods Pro and iPhone, Apple kept its talk of artificial intelligence capabilities to a minimum. Apple stock sold off after the event, below a buy point.
Synopsys Dives On Poor Report
Electronic design automation software firm Synopsys badly missed Wall Street's fiscal Q3 EPS targets. Earnings fell 1% to $3.39 a share vs. views for $3.80. Revenue climbed 14% to $1.74 billion, slightly missing. Guidance was mixed. Synopsys blamed the miss on weakness in its intellectual property business. Its stock dived on the news. Close peer Cadence Design Systems fell solidly.
Rubrik Dives On Too-High Expectations
The data storage and security software firm lost 3 cents a share adjusted vs. a year-earlier loss of 40 cents and views for a 35-cent shortfall. Revenue swelled 51% to $310 million, easily beating and with growth accelerating again. Rubrik reported subscription-based ARR of $1.25 billion, up 36%, slightly topping consensus. For the October quarter, Rubrik guided overall revenue higher. But expectations were high. Rubrik stock plunged from near record highs. Cybersecurity firm SailPoint swung to a better-than-expected profit while revenue rose 33% to $264.4 million. But guidance was light. Shares fell solidly, though they came off lows.
Swedish Fintech Klarna Goes Public
Klarna priced its IPO at $40 a share, above the expected range, raising $1.37 billion. The "buy now, pay later" payments firm jumped as high as 57.20 in Wednesday's debut, settling for a near-15% gain to 45.82. Venture firms backing Klarna include Sequoia Capital. Rivals include Affirm, Sezzle and BNPL offerings from Square-parent Block and PayPal.
Adobe Delivers Beat-And-Raise Report
The digital media and marketing software firm beat fiscal third-quarter estimates, with EPS up 14% as revenue grew 11% to $5.99 billion. Adobe also guided slightly above views for Q4. The company said nearly 90% of its top 50 enterprise accounts have adopted one or more of Adobe's AI-first innovations. Shares popped but have been in a long downtrend.
Stock Market News In Brief
Nebius Group skyrocketed on a multiyear AI cloud-computing deal with Microsoft worth up to $19.4 billion.
Alphabet is leaning into Google's artificial intelligence prowess in models, chips, agents and data security to grow its cloud computing business, said Google Cloud chief Thomas Kurian, said at the at Goldman Sachs' Communacopia conference. Kurian added that the cloud business now has an order backlog of $106 billion, with over half converting to revenue within two years. He hailed Google's AI broad, strong overall demand.
Taiwan Semiconductor Manufacturing reported strong sales for August, up about 34% year over year. The contract chipmaker continues to benefit from elevated production of AI processors from customers Nvidia, AMD and others. Shares jumped to a new high.
Casey's General Stores beat estimates with EPS up 20% while revenue rose 11.5% to $4.567 billion. Same-store sales climbed 4.3%, while same-store fuel gallon sales increased 1.7% year over year. The convenience store chain said summer merchandise helped drive store traffic. Casey's saw strong performance from all income groups, but especially more affluent customers. CASY stock broke out of a base.
Chewy dived after on Q2 results. EPS met views with a 36% rise while sales climbed 8% to $3.104 billion, just beating. But 4.5% active-customer growth lagged expectations. The online pet food and supplies company raised its full-year revenue forecast slightly.
Novartis agreed Tuesday to buy Tourmaline Bio for $1.4 billion. Tourmaline is working on a treatment for atherosclerotic cardiovascular disease. Recently, Tourmaline said up to 65% of patients who received its drug experienced deep reductions in a high-sensitivity C-reactive protein, a key indicator of cardiovascular disease.
Core & Main dived after the infrastructure and drainage provider slashed its outlook on Monday, noting higher operating expenses and softer residential demand. CEO Mark Witkowski blamed weaker single-family housing development on higher interest rates, affordability concerns and lower consumer confidence. Q2 EPS topped while revenue well. Homebuilding stocks fell on the news, but they bounced back.
Talen Energy hiked its current stock buyback program by $1.005 billion, for a total of $2 billion. The announcement came in the nuclear energy play's investor update in which it touted substantial growth opportunities in its Pennsylvania and Ohio, "which are some of the fastest growing data center markets in the U.S." TLN stock broke out.
AeroVironment jumped 7% Wednesday after the drone and defense tech firm hiked its earnings outlook significantly after mixed results. Q1 EPS just missed while revenue beat with a 140% gain. AeroVironment in May completed its $4.1 billion all-stock acquisition of BlueHalo.
GameStop earned 25 cents a share vs. 1 cent a year earlier while revenue jumped 22% to $972.2 million. Both comfortably beat. The company said it purchased 4,710 bitcoin during Q2, and that its holdings were valued at $528.6 million at the end of the quarter. GME stock jumped for the week, paring 2025 losses.
Kroger edged past views with a 12% EPS gain, but nearly flat sales of $33.94 million slightly missed. But the grocery giant guided up on revenue.
Gemini Space Station, a cryptocurrency exchange founded by the Winklevoss twins, sold 15.2 million shares at $28, days after raising the expected price range to $24-$26. The IPO raised its $425 million.
