Inflation data, Oracle earnings, and an energy supply crunch: What to watch this week

Coming off a bombastic August nonfarm payrolls report that far exceeded expectations, investors step into a holiday-shortened trading week with all eyes on inflation data and earnings from the final hyperscaler of the cycle, Oracle ( ORCL ).

Two questions are set to lead the week: Will the data push the Fed toward a rate hike, and what can Oracle tell Wall Street about the state of Big Tech's AI debt load?

The Nasdaq ( ^IXIC ) was down 0.3%. The S&P 500 ( ^GSPC ) was down 0.4%. And the Dow ( ^DJI ) dropped 0.5%.

Coming off a jobs report that saw consensus move a bit closer to pricing in a rate hike from the Federal Reserve in September, investor attention will be focused squarely on Friday's Consumer Price Index, set to give the FOMC a read on the state of inflation that has held above target for five years. Producer Price Index data on Thursday will offer a preview from the wholesaler side of the pricing equation.

In the corporate world, Thursday will be the day to watch, with earnings from Larry Ellison's Oracle pulling focus. Given the company's turn toward debt, quarterly results from Oracle tend to act as a bellwether on the state of AI financing. Adobe ( ADBE ) is also set to report on Thursday, coming off a fresh CEO change. Finally, Macy's ( M ) results — also on Thursday — will provide a read on the state of the consumer.

Heading into Friday morning, bets were essentially split 50/50 on whether the Federal Reserve will issue a rate hike in September. The nonfarm payrolls report was expected to show 55,000 jobs added, a fairly middle-of-the-road, low-impact number.

Instead, the Bureau of Labor Statistics reported that the US economy added 162,000 jobs in August, far exceeding even the most bullish of Wall Street expectations — and yet bets on the Fed's September meeting moved only marginally toward a rate hike.

The real test for Fed Chairman Kevin Warsh and the FOMC, economists and market-watchers say, will be this week's inflation data, as Warsh has made price stability the singular focus of his Federal Reserve.

"For the Fed, the jobs report squarely focuses attention on inflation at the next meeting," Bill Adams, chief economist at Fifth Third Commercial Bank, said in a note. "That next decision will be finely balanced. Next week's releases of the August CPI and PPI reports have the power to swing it between a hike and a hold."

That sentiment comes after comments from Warsh himself during his first keynote address at the annual Jackson Hole symposium. During that speech, the chair said the Fed's 2% target for price increases was fixed, and that it's the Fed's duty to rein in inflation running hot.