Oil prices fell on a report that Iran has proposed a plan to end the war in the Middle East, and the main equity indexes finished the last day of the last full trading week of September with solid gains. But rising bond yields remain a broad concern heading into October.
According to The New York Times, Iran’s “seven-day plan to cease hostilities” would reopen the Strait of Hormuz and revive negotiations over its nuclear program.
President Donald Trump also said he talked about the war with President Xi Jinping during this week’s U.S.-China summit. “I think we’re going to do great,” the president predicted.
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The front-month West Texas Intermediate crude oil futures contract was down 2.5% to $92.29 per barrel. Brent crude oil futures, the global benchmark, declined by 2.8% to $97.43.
The 2-year Treasury yield, a proxy for the direction of monetary policy, ticked down by 4.8 basis points to 4.847%. Meanwhile, the 10-year Treasury yield (-0.6 bps, 5.156%) and the 30-year Treasury yield (+2.3 bps, 5.485%) reached fresh 52-week highs on Friday.
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At the closing bell, the blue-chip Dow Jones Industrial Average was up 0.9% for the day and 0.3% for the week to 51,828. Papa Dow put an end to a three-week losing streak.
The broad-based S&P 500 added 0.5% on Friday and 1.2% for the five days to 7,743, and the tech-heavy Nasdaq Composite was up 0.5% and 2.1%, respectively, to 27,068.
Inflation expectations are up, sentiment is down
The University of Michigan Consumer Sentiment Index declined to 48.1 in September from 51.7 in August, according to revised survey results released on Friday. The revised number was up from a preliminary 47.8. But, as Surveys of Consumers Director Joanne Hsu notes, it’s the lowest print for the index since May, and sentiment is down from 55.1 a year ago.
“Views of current and year-ahead expected personal finances both weakened about 10% this month,” Hsu writes, “with concerns over high prices continuing to climb.”
Indeed, year-ahead inflation expectations rose from 4.0% in August to 4.6% in September, the highest level since June.
“The current reading substantially exceeds the 3.4% seen in February before the Iran conflict began,” Hsu observes, “along with all 2024 readings.”
Long-term inflation expectations rose to 3.4% after three straight months at 3.3%.
Akamai makes an Anthropic deal
Akamai Technologies (AKAM, +3.2%) is on our list of 33 stocks that could rally 33% or more because its cloud-based platform is well-positioned for the artificial intelligence (AI) infrastructure build-out.
A new seven-year, $11.6 billion deal to provide computing power to AI model leader Anthropic underscores that premise, and the tech stock soared after the deal was announced. The contract includes an option to add another $9 billion and push the total deal value to more than $20 billion should Anthropic require more “compute.”
According to Guggenheim analyst John DiFucci, the base annual recurring revenue figure is more than five times Akamai’s 2025 cloud infrastructure revenue ($314 million) and 40% of its total revenue ($4.2 billion).
DiFucci reiterated his Buy rating on AKAM and raised his 12-month target price from $190 to $225.
Will MGM bet on PPLI?
According to The Wall Street Journal, MGM Resorts (MGM, -3.3%) is talking about a bid to buy People (PPLI, +11.3%). As the WSJ notes, it’s “an unusual turn of events that comes just after People withdrew its own bid to buy the casino and resort company.”
MGM declined by 11% on Thursday, the S&P 500 stock giving back all of the paper gains (and then some) it had seen since People’s $48.30 per share offer was made public on June 1.
PPLI, with a market cap of $2.7 billion as of September 24, holds a 27% stake in MGM, which was valued at $8.5 billion through Thursday.
People’s MGM stake on its own is worth $2.5 billion, “suggesting to many on Wall Street,” as the WSJ observes, “that the market isn’t recognizing potential value in People’s seemingly disparate holdings.”