The Nasdaq jumped 2.26% to a record close of 27,122.09 today, while the S&P 500 gained 1.49% to 7,764.70.
Immediate relief came from energy. Brent settled near $100 and WTI dropped to the mid-$90s after Trump said he would be open to meeting Iran’s president. Geopolitical anxiety eased after the New York Times reported that Trump reversed a decision to launch US airstrikes on Yemen’s Houthis. That pulled the 10-year Treasury yield back under 5% and helped stocks.
Cheaper oil gave markets a quick lift, but Federal Reserve officials pushed back against expectations of easier policy.
The Fed funds rate sits at 3.75% to 4.00% after last week’s hike, the first increase in three years. Officials penciled in at least one more hike this year, and PCE inflation remains near 3.7%.
Chicago Fed’s Goolsbee warned that inflation may now be demand-driven and that one more hike may not be enough. St. Louis Fed President Alberto Musalem stated that more rate hikes are likely needed, calling the current range accommodative. Minneapolis Fed President Neel Kashkari argued that inflation remains too high across the economy, not just in energy.
Markets price roughly a 50% chance of another rate hike in October. Meanwhile, the Chicago Fed National Activity Index slipped to -0.04 in August, showing growth slightly below long-run trend.
Consumer AI Ignites Immediate Hardware Demand
Meta led the charge today, surging 11.4% to $741.25 and adding roughly $200B in market value after Wells Fargo raised its price target to $796.
The spark was fast consumer adoption for Meta’s new AI assistant app, Muse, internally code-named Hatch. Muse reached 2.8M downloads in its first 12 days across both app stores. By day 12, Muse had 642K U.S. mobile DAUs versus 231K for ChatGPT at the same point. Muse also reached number 1 on Apple’s U.S. App Store.
Meta is already moving to monetize that traffic. Wang said the Muse personal agent will offer a free tier or monthly subscription plans of $20 or $100, depending on usage. Meta also partnered with Shopify to bring agentic checkout with Shop Pay across every Shopify store inside Muse.
That usage is spilling directly into hardware demand. MentoviaX noted discussions that Meta was renting older machines on large clusters of 256 to 512 gigabytes of CPU memory to accommodate Muse. Investors tied the demand to chipmakers: AMD topped a $1T market cap for the first time, Intel climbed roughly 12%, and ARM surged about 17%.
Meta is also building physical infrastructure to carry the load. Meta unveiled the first petabit-scale transatlantic cable between the U.S. and France, capable of moving 1 petabit per second by 2029, and is investing $115 million to train blue collar workers for guaranteed data center jobs.
Multi-Hundred-Billion Compute Budgets Collide with Expensive Debt
Consumer traction is real, but the capital required to run these models is staggering.
According to the Financial Times, OpenAI projects $278B of cumulative negative free cash flow through 2030, driven by roughly $856B of compute and infrastructure spending. OpenAI expects revenue to grow from $36B this year to $350B in 2030, generating roughly $840B in total revenue over the remainder of the decade. Its $122B funding round from March is projected to be exhausted by 2028, and it is discussing another raise at a valuation above $1.2T while delaying its initial public offering.
Anthropic is scaling just as aggressively. According to the New York Times, Anthropic told investors it expects to scale available compute capacity to roughly 5 GW by the end of this year, up from about 1.5 GW last year. Both OpenAI and Anthropic target around 10 GW by the end of 2027. Anthropic secured a deal to pay SpaceX about $1.25B per month for compute through May 2029, while its Amazon partnership includes up to 5 GW of capacity. Anthropic is also discussing a $10B compute lease with Meta over two years.
Nvidia sits at the center of this spending web. Nvidia disclosed around $366 billion in future commitments extending from fiscal 2027 to beyond fiscal 2032, including $267 billion in supply and capacity commitments between fiscal 2027 and fiscal 2029. Nvidia guaranteed around $3.5 billion in AI data center leases and $105 billion related to SB Energy’s data center buildout for OpenAI.
Financing terms are beginning to decide who profits. CoreWeave is paying 8.3% on approximately $35B of debt, pushing interest expense toward approximately $900M per quarter. Nebius saw its borrowing rate climb from 2.3% to 5.5% over three quarters, while Iris Energy pays 1.7% by funding through convertible debt.
A capital-cycle analysis noted that $3 trillion in spending over three years with a six-year data center life generates half a trillion in depreciation, weighing against top 10 S&P 500 net income of $600 billion.
Structural Energy Bottlenecks Threaten Rates
Underneath today’s market rally, serious counter-arguments warn that energy relief is temporary.
Geopolitical Economy Report attributes the surge in energy costs to the U.S. war against Iran launched on February 28. According to US government data, the average US gasoline price was around $3 in January 2026 and nearly $4.5 in September. In California, it was nearing $6. Diesel prices rose to more than $6 per gallon in the United States and $8 in California, with some stations listing diesel at $9.99.
The structural bottlenecks are massive:
- The closure of the Strait of Hormuz has disrupted 20% of global oil supply.
- Drone attacks on Saudi Arabia’s East-West pipeline took 4% of global supply offline for several weeks.
- Red Sea blockades around Bab el-Mandeb threaten another 10%.
- The U.S. Strategic Petroleum Reserve has fallen to its lowest recorded level.
Disruptions are piling up globally. One in nine fuel stations in France faces shortages, a drone attack damaged a major Russian oil refinery, and Iran issued a Code 100 alert threatening unlimited retaliation against U.S. bases if attacked.
If Middle East oil disruptions persist, temporary price drops will reverse, driving crude and diesel higher, keeping inflation sticky, and forcing interest rates to stay higher for longer. With CoreWeave paying 8.3% on approximately $35B of debt and OpenAI projecting $278B in negative cash flow, today’s market record is betting that cheap capital returns before the bills for this compute cycle come due.