Dow Futures are experiencing a slight increase, influenced by a crucial inflation indicator that may play a significant role in shaping the Federal Reserve’s forthcoming interest rate decision next week. Brent crude futures decline slightly, yet remain significantly above the $100-per-barrel threshold, as Oracle and Adobe unveil their most recent quarterly results.

Dow futures indicated an upward trajectory on Friday, as investors braced for the forthcoming release of pivotal inflation data that may influence the future direction of U.S. interest rates. By 02:57, the Dow futures contract had risen by 232 points, or 0.5%, S&P 500 futures had jumped by 33 points, or 0.4%, and Nasdaq 100 futures had advanced by 120 points, or 0.4%. The main averages on Wall Street slipped yet again on Thursday, with the benchmark S&P 500 falling for a fourth straight session due largely to pressure from “another terrible day for bonds,” analysts said in a note. U.S. 10-year Treasury yields continued their climb towards the 5% level, fueled by fears that a renewed spike in oil prices will lead to faster interest rate hikes. Highlighting these concerns, the European Central Bank elevated borrowing costs, and a report indicated that policymakers might be considering another increase as early as October. Money markets are currently anticipating three additional rate hikes within the upcoming year. “The combination of higher energy prices and a hawkish ECB put fresh pressure on sovereign bonds across the board,” and dented appetite for risk assets in the process, the Deutsche Bank analysts said.

U.S. consumer price growth is anticipated to have increased on a month-on-month basis in August, primarily driven by a rise in petrol pump prices. Economists project that the Labour Department’s consumer price index will increase by 0.4% from July to August, a notable rise from the previous figure of 0.1%. In the twelve months leading up to August, the figure is observed to align with July’s rate of 3.4%. Excluding volatile components such as food and fuel, the “core” measure is projected to remain at 0.2% on a month-on-month basis and 2.4% on a year-on-year basis. In July, the figures were recorded at 0.2% and 2.5%, respectively. Federal Reserve officials are expected to closely monitor the Consumer Price Index report. Policymakers at the central bank have emphasised their commitment to addressing inflation in their upcoming meeting, fuelling speculation that the Fed may choose to increase rates after the two-day session on Wednesday. These expectations were further solidified by data released on Thursday, indicating that costs for various components contributing to one of the Federal Reserve’s favoured inflation metrics, the personal consumption expenditures price index, rose at an accelerated rate in August.

Meanwhile, the intensifying crisis in the Middle East now seems to be escalating into a broader regional crisis that could further disrupt global shipping. “Once again, it is geopolitical fears driving everything,” stated the analysts from Deutsche Bank. The latest source of concern is the safety of Red Sea tanker traffic and the subsequent effect it may have on oil exports from major producer Saudi Arabia. Iran-backed Houthi militants in Yemen seized a vital port city on Thursday, which may enhance their control over the strategic Bab el-Mandeb Strait that connects the Red Sea to the Gulf of Aden, according to media reports. Meanwhile, vessel transits through the nearby Strait of Hormuz declined to seven on Thursday, significantly under the 10-day moving average of 15, according to shipping data. Iran’s decision to effectively close the strait shortly after the onset of its conflict with the U.S. and Israel in late February triggered a significant surge in oil prices, which has fuelled concerns over global inflation. Although benchmark Brent crude futures remain above the $100-a-barrel level surpassed earlier this week, the contract did retreat on Friday following a report indicating that Gulf foreign ministers and Iranian authorities are attempting to negotiate a temporary deal to manage shipping through the Strait of Hormuz.

Oracle reported a quarterly performance that exceeded expectations on both revenue and earnings, subsequently raising its fiscal full-year profit guidance. This development resulted in an increase in the company’s shares during after-hours trading on Friday. Austin, Texas-based Oracle has, in recent years, shifted its emphasis toward cloud computing infrastructure, while its foundational products, including database software and enterprise applications for finance, persist in generating revenue. Concerns have proliferated regarding the potential effects of artificial intelligence on ORCL’s fundamental operations. Oracle has sought to alleviate investor apprehensions by positioning itself as a significant contributor to the establishment of data centers designed to accommodate AI workloads, effectively transforming into a hyperscaler. Its performance is regarded as a publicly traded proxy for the AI infrastructure buildout, with its Oracle Cloud Infrastructure unit directly competing with Amazon’s AWS, Microsoft’s Azure, and Google’s cloud offerings. “Customer demand for AI Cloud Training and Inferencing Services continues to grow faster than supply,” Oracle stated. It secured over $30 billion in new AI cloud contracts during the quarter, thereby elevating its remaining performance obligations-defined as the total value of future revenue from customer contracts yet to be recognized-to $664 billion. The company also stated that the majority of the newly contracted revenue will not necessitate significant cash outlays on semiconductors, enabling its annual expenditure target to remain within the range of $90 billion to $95 billion. Oracle has been under examination regarding the potential returns of its substantial AI investments and their impact on its balance sheet.

Adobe exceeded Wall Street’s third-quarter projections due to strong subscription growth; however, shares experienced a slight decline in after-hours trading following the software company’s fourth-quarter revenue forecast, which narrowly missed expectations. The design software company reported adjusted earnings per share of $6.13 for the third quarter, exceeding the analyst consensus of $6.07. Revenue reached $6.76 billion, surpassing the estimate of $6.69 billion. For the fourth quarter, Adobe provided revenue guidance ranging from $6.80 billion to $6.85 billion, with a midpoint of $6.825 billion, which does not meet the $6.85 billion consensus among analysts. The company anticipates fourth quarter adjusted EPS in the range of $6.30 to $6.35, with a midpoint of $6.325 billion aligning with consensus estimates.