January core PCE rose 0.4% month over month and 3.1% year over year, both in line with estimates, while fourth-quarter GDP was revised down to a 0.7% annualized pace from an expected 1.4%, a reminder that growth is losing momentum.
A possible explanation for the rise in futures is that markets may be latching onto signs that the worst-case oil scenario is not, at least yet, fully materializing. Secretary of Defense Pete Hegseth said this morning that Iran's leadership has been weakened, that there is no clear evidence the Strait of Hormuz has actually been mined, and that Washington remains open to talks.
The coming week only raises the pressure. The Fed meets soon. So do the European Central Bank and the Bank of England. If oil stays high, rate cuts become harder to justify. If growth weakens at the same time, the policy choices become uglier. Sustained high oil prices would both lift inflation and weigh on growth, which is exactly the sort of mix central banks fear most.
That helps explain why traders have dramatically changed their expectations. Not long ago, markets were still looking for multiple Fed cuts this year. Now, the outlook has shifted toward maybe one cut, or perhaps none at all.
Washington has responded by trying a bit of everything: emergency supply measures, diplomatic assurances, and even a temporary easing that allows countries to buy sanctioned Russian oil already stranded at sea. That last step is revealing. When a government starts bending one geopolitical doctrine to patch the consequences of another, it is usually a sign that events are moving faster than strategy.
Iran, for its part, seems to understand exactly where its leverage lies. It cannot match the military power aligned against it. But it does not have to. It can impose economic pain, inject uncertainty, and force its adversaries to absorb the costs of prolonged disruption.
Yesterday's session showed what happens when markets start taking that possibility seriously. Wall Street fell sharply, with the major indexes losing more than 1.5%. The S&P 500, the Dow, and the Nasdaq 100 are now all down on the year. Small caps, which tend to be especially sensitive to the path of interest rates, have also stumbled, giving back much of their earlier momentum. Europe is slipping too. Bloomberg reported earlier this week that US stock futures had fallen on the oil spike and inflation fears; this morning's rebound therefore looks less like a clean turn in sentiment than a tentative bounce after heavy losses.
Elsewhere, bond markets are uneasy, which is why the dollar is stronger. Gold, which in theory should thrive on fear, has been pressured by the stronger dollar and the prospect of higher-for-longer rates.
There is another source of anxiety here, and it deserves more attention than it usually gets: private credit. In boom times, private credit was sold as one of modern finance's smartest innovations, a quieter and cleverer machine for generating yield. Now some of the industry's biggest names are halting or limiting redemptions, while banks are becoming more cautious about lending into the system. This is what financial stress often looks like in its early stages: not a dramatic collapse, but a series of doors that suddenly become harder to open.
Other bad news is coming from corporate America. Adobe shares sank after news that its longtime CEO will step down, reviving concerns about the company's direction as artificial intelligence reshapes the software business. The market reaction was harsh because investors increasingly suspect that AI is not just another feature upgrade. It may be a demolition crew for parts of the old software order.
Today's economic data may add more detail, but they may not add much clarity. In fact, they already have done both at once: the GDP revision points to a weaker economy, while core PCE offered no real inflation relief, only confirmation. That may be enough for a short-lived rise in futures, but not enough to remove the deeper tension hanging over markets.
Friday the 13th may or may not be bad luck. Markets are not cursed. They are simply confronting reality again, even if this morning they are trying, briefly, to look past it.
Today's economic highlights:
- Dollar index: 100.111
- Gold: $5,111
- Crude Oil (BRENT): $99.37 (WTI) $93.84
- United States 10 years: 4.27%
- BITCOIN: $72,412
In corporate news:
- Didi Global narrowed its quarterly net loss to 300 million yuan as revenue rose 10.5%, though faster international expansion continued to weigh on profitability.
- LyondellBasell reported a fire at its Bayport Choate chemical plant in Texas, while saying all personnel were safe and there was no threat to the surrounding community.
- Adobe shares fell after the company said CEO Shantanu Narayen would step down, deepening investor concerns about its position amid AI-driven disruption in design software.
- ByteDance gained access to advanced Nvidia AI chips through Aolani Cloud in Malaysia to support its global artificial intelligence ambitions.
- Apple will cut its App Store commission in China to 25% from 30% starting March 15, a major win for developers after regulatory pressure.
- BE Semiconductor Industries (BESI) has attracted takeover interest, including from Lam Research and potentially Applied Materials, as demand for advanced chip-packaging technology rises.
- Chevron-led Tengizchevroil is investigating an incident at Kazakhstan's Tengiz oilfield, with no injuries reported and production said to be continuing.
- Opposition to new data centers is becoming an issue in French local elections, with projects linked to Amazon and Segro facing criticism over energy use, noise, and limited local jobs.
- Li Auto shares fell after the company reported a sharp drop in quarterly profit and weak first-quarter guidance amid slowing demand and tougher competition in China's EV market.
- Meta postpones the launch of its new AI model after concerns about its performance, reveals the NYT.
- Bytedance gains access to Nvidia's cutting-edge AI chips, according to the WSJ.
- Amazon plans to move its annual Prime Day sales from July to June, according to Bloomberg.
- Tesla is converting its investment in xAI into a stake in SpaceX ahead of the IPO, according to Bloomberg.
- PayPay shares jumped 14% after the IPO.
Analyst Recommendations:
- Adobe Inc.: Barclays downgrades to market weight from overweight and reduces the target price from USD 335 to USD 275.
- Air Products & Chemicals, Inc.: Wells Fargo upgrades to overweight from equalweight and raises the target price from USD 270 to USD 325.
- Alcoa: JP Morgan upgrades to neutral from underweight and raises the target price from USD 50 to USD 68.
- Celanese Corporation: Wells Fargo upgrades to overweight from equalweight and raises the target price from USD 55 to USD 70.
- Flagstar Bank, National Association: Keefe Bruyette & Woods upgrades to outperform from market perform and raises the target price from USD 14 to USD 16.
- Linde Plc: JP Morgan upgrades to overweight from neutral with a price target raised from USD 455 to USD 525.
- Oracle Corporation: CITIC Securities Co Ltd upgrades to buy from hold with a target price of USD 200.
- Qiagen N.v.: Deutsche Bank upgrades to buy from hold with a target price of USD 54.
- Casey's General Stores, Inc.: Wolfe Research maintains its outperform rating and raises the target price from USD 638 to USD 808.
- Dow Inc.: Wells Fargo maintains its overweight recommendation and raises the target price from USD 30 to USD 45.
- Hims & Hers Health, Inc.: First Shanghai Securities maintains its buy recommendation and reduces the target price from USD 56.80 to USD 31.10.
- Lyondellbasell Industries N.v.: Wells Fargo maintains its equalweight recommendation and raises the target price from USD 48 to USD 70.
- Revolution Medicines, Inc.: Wolfe Research maintains its outperform rating and raises the target price from USD 75 to USD 110.
- Rubrik, Inc.: BMO Capital Markets maintains its outperform rating and reduces the target price from USD 105 to USD 70.
- Sentinelone, Inc.: Canaccord Genuity maintains its buy recommendation and reduces the target price from USD 23 to USD 17.
- Venture Global, Inc.: RBC Capital maintains its outperform rating and raises the target price from USD 11 to USD 14.
- Whirlpool Corporation: JP Morgan maintains its neutral recommendation and reduces the target price from USD 76 to USD 59.
