Dow soars 400 points, oil retreats as inflation data calms slumping Wall Street

• The S&P 500 gained 0.9% and Nasdaq rose 1%, ending a four-day decline as oil pulled back from near $110 per barrel overnight
• Two-year Treasury yield rose to 4.57% while the 10-year yield fell to 4.92%, suggesting bond markets expect Fed rate hikes will control long-term inflation
• Oracle climbed 2.6% and Kroger rose 4.2% on better-than-expected earnings, while ACV Auctions soared 44.3% on a $10.50 per share acquisition offer from Copart

Market Summary: Stocks Rebound on Inflation Data and Oil Pullback

Market Performance:

U.S. stocks rallied Friday, breaking a four-day losing streak—the longest since June. The Dow Jones Industrial Average surged 390 points (+0.8%), the S&P 500 gained 0.9%, and the Nasdaq Composite rose 1%. The Dow initially climbed over 600 points before moderating.

Key Economic Data:

• U.S. inflation came in at 3.4% year-over-year, meeting economist expectations and providing relief to investors
• Consumer sentiment declined according to University of Michigan preliminary data, with inflation expectations jumping to 4.6% from 4%—the highest since June
• Two-year Treasury yield rose slightly to 4.57% from 4.56%, while the 10-year yield fell to 4.92% from 4.95%

Oil Market Movement:

Brent crude oil retreated 3% to $104.42 per barrel after approaching $110 overnight. Oil had spiked earlier in the week to May highs due to ongoing geopolitical tensions (referenced as conflict with Iran).

Federal Reserve Outlook:

Markets are pricing in an interest rate hike at next week's Fed meeting. The decline in longer-term yields suggests bond investors believe Fed rate increases will effectively control inflation over time, despite concerns about economic pain in the near term.

Company Performance:

• Oracle: +2.6% on better-than-expected earnings and revenue
• Kroger: +4.2% after beating profit expectations while maintaining full-year guidance
• ACV Auctions: +44.3% following Copart's $10.50 per share cash acquisition offer

Market Implications:

The inflation data reinforced Fed tightening expectations while easing immediate recession fears, providing temporary relief to markets amid broader concerns about consumer confidence and persistent inflation.