Key Takeaways
- Brent Crude futures surged 8.52% to settle at $92.69 per barrel following reports that Iran is restricting ships linked to the US and Israel from passing through the Strait of Hormuz.
- Federal Reserve official Beth Hammack labeled the February jobs report a "disappointment" and warned that there has been virtually no progress on inflation in the past two years.
- US Consumer Credit for January rose by only $8.05 billion, significantly missing the consensus estimate of $12.65 billion, signaling a sharp slowdown from the previous month's $25.20 billion.
- AI chipmaker Cerebras has reportedly tapped Morgan Stanley (MS) to lead a $2 billion Initial Public Offering (IPO).
- Oracle (ORCL) and OpenAI have ended plans to expand their Texas data center site, while Meta (META) is in talks to lease an expanded site from developer Crusoe.
Fed Signals Neutral Stance Amid Inflation Deadlock
Federal Reserve official Beth Hammack stated Friday that while the economy remains in a "reasonably good place," the February jobs report was a disappointment. Hammack noted that the labor market is stabilizing but expressed concern that inflation remains above target with almost no improvement over the last 24 months.
The Fed is currently navigating "two-sided risks" to interest rates, with Hammack suggesting that current policy is "right around neutral" and not overly restrictive. Market participants are closely watching the impact of rising energy costs, as Hammack warned that higher oil prices could put upward pressure on inflation while simultaneously weighing down consumer spending.
Energy Markets React to Middle East Escalation
Brent Crude prices spiked by $7.28 to settle at $92.69, driven by heightening geopolitical friction in the Middle East. A senior military spokesperson in Iran announced that while the Strait of Hormuz remains open, ships with links to the US or Israel will be barred from passage.
In response to the escalating situation, US officials confirmed that the aircraft carrier USS Gerald R. Ford has moved from the Eastern Mediterranean through the Suez Canal and is now active in the Red Sea. The shift in naval assets and the threat to shipping lanes have sparked fears of prolonged supply chain disruptions, further complicating the global inflation outlook.
Tech and AI Sector Developments
In the technology sector, Cerebras is moving forward with a $2 billion IPO, selecting Morgan Stanley (MS) to lead the offering. This move comes as AI infrastructure demand remains high, though some major projects are seeing shifts. Oracle (ORCL) and OpenAI have reportedly scrapped plans to expand a massive data center in Texas, though reasons for the cancellation were not immediately disclosed.
Conversely, Meta (META) is looking to increase its footprint by negotiating a lease for an expanded site with Crusoe. Meanwhile, Amazon (AMZN) reassured its cloud customers that they can continue using Anthropic’s Claude AI models, maintaining its competitive position in the generative AI market.
Consumer Credit and Trade Policy
US Consumer Credit growth slowed to an annual rate of 1.9% in January, with total credit increasing by $8.05 billion. This was a sharp decline from the downwardly revised $25.20 billion seen in December, as nonrevolving credit (such as auto and student loans) grew by only 1.1%.
On the trade front, the US Court of International Trade has suspended a March 5 order that directed Customs to issue immediate tariff refunds. The legal pause comes as US Customs works on a formal system to process refunds, according to reports from NPR, leaving businesses in a state of temporary uncertainty regarding the timing of their reimbursements.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.