Chapter 1: What is the main topic discussed in this episode?
Public.com presents The Rundown, your daily market update in under 10 minutes.
My name is Zaid Admani, and today is Wednesday, March 11th. In today's episode, we'll recap the latest inflation report and why the market is pretty much ignoring it. We'll also tell you about the clutch earnings from Oracle. Then stick around to the end of the show to find out why Meta just bought a social network for AI bots. We got a great show for you today. Let's go.
Well, we had another up and down day of trading on Tuesday. Markets were whipsawing from green to red throughout the day. And by the close, the S&P was down 0.2%, while the NASDAQ was basically flat. Honestly, though, the fact that stocks ended roughly flat, given everything that happened, is kind of impressive.
The main story continues to be oil prices, which had another absolutely wild day of trading. Mid-afternoon on Tuesday, Energy Secretary Chris Wright posted on X that the U.S. Navy had successfully escorted an oil tanker through the Strait of Hormuz. And when that tweet hit the timeline, oil prices immediately plunged to as low as $77 a barrel in the stock market rally.
Then a few minutes later, that post was deleted. Turns out it was incorrect information. The White House later clarified that the U.S. Navy is not currently escorting commercial tankers through the Strait of Hormuz. So that caused oil prices to jump right back up, and they're currently trading around $85 a barrel.
So yeah, that was pretty weird and wild, and it's another example of how reactionary and headline-driven the market is right now. As of right now, the traffic through the Strait of Hormuz is still at a standstill. In fact, just this morning, there were reports that three cargo vessels were struck by projectiles off the coast of Iran, including one that caught fire and forced the crew to evacuate.
So it's still a dangerous situation. And while oil prices have come back from their peak of $119, prices are still up 30% since the war broke out about 10 days ago, and consumers are starting to feel the pain at the pump. So now governments all over the world are preparing to respond to the jump in oil prices.
The 32 countries of the International Energy Agency are planning to vote today on releasing 400 million barrels from their strategic oil reserves, which would be the largest release in history. So that could put a temporary lid on oil prices. You know, it adds more supply to the market.
But ultimately, though, I think the market is going to be on edge until the situation with the Strait of Hormuz is resolved. But there seems to be no signs of that just yet. You know, the longer that oil prices stay elevated, the bigger the impact it's going to have on the economy. It could lead to inflation coming back, higher input costs for businesses. I mean, there's a cascading effect.
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Chapter 2: What caused the recent fluctuations in oil prices?
Obviously, this is a fast moving story. We're staying on top of everything. So make sure you guys are subscribed to the podcast and tuning in every day to stay in the loop. Let's run through some headlines, starting with inflation. The February CPI report just dropped this morning and the numbers came in right in line with expectations. Prices rose 0.3% month over month and 2.4% from a year ago.
And when you look at core inflation, which economists like to focus on because it strips out volatile prices like food and energy, that came in at 2.5% annually, which is the slowest pace in nearly five years. What stood out to me as someone who's trying to buy a car soon is that used car prices fell. Also, rent prices were up just 0.1%, which is the smallest increase in five years.
So on the surface, this inflation report was not bad. But here's the thing though, this report is pretty much outdated already because it only captures prices before the war with Iran started back on February 28th. So it doesn't capture the surge in oil prices and the ripple effect that that's having on the economy right now.
Economists often estimate that every $10 increase in oil prices can add about 0.2 percentage points to inflation. In fact, we're already seeing a real impact at the prompt. The average gas price went from $2.90 a gallon before the war to around $3.50 today. So the March report is going to be key. The numbers there could get pretty ugly.
This inflation report is unlikely to influence the Federal Reserve's decision on interest rates. The Fed is meeting next week and the market is pricing in a 99% chance interest rates stay as is. And with the potential resurgence of inflation, the Fed might have to wait even longer to cut interest rates. We'll see what Fed Chair Jerome Powell has to say about it next week.
Let's shift gears and talk about Oracle. They reported earnings last night and the numbers came in strong. Total revenues grew 22% to $17.2 billion, beating Wall Street estimates. But the real headline is the cloud infrastructure business, which is basically Oracle's data center and AI computing segment.
Revenues there surged 84% to $4.9 billion, accelerating from the 68% growth last quarter and beating Wall Street expectations. And it's Oracle's outlook that got investors really excited. Oracle raised its fiscal 2027 revenue forecast to $90 billion, well above the $86.6 billion that analysts were expecting.
Management said that demand for AI cloud computing continues to outpace supply and that some of their biggest AI customers have recently strengthened their financial positions, which just means that more money is coming Oracle's way. So I got to say, this was a clutch performance for Oracle.
The stock had lost more than half its value since its peak back in September due to cost concerns tied to its AI data center build out. I think investors had become skeptical about Oracle's ability to afford all the AI building or if the AI demand would even materialize. But I think the acceleration in cloud revenue growth should put some of those concerns to rest.
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