Markets resume gains as oil drops following midterms

A drop in oil prices was able to push investors past worries about inflation, the Nvidia scandal, and possible interest rate hikes.MANHATTAN (CN) — Wall Street added to last week’s gains, as the significant drop in oil prices that began after last week’s elections continues to bolster equities.By the closing bell Friday, the Dow Jones Industrial Average gained 1,062 points for the week, while the S&P 500 netted 186 points — one of its best weeks since the summer. Tech stocks were riled throughout the week due to the Nvidia scandal, but the tech-heavy Nasdaq ultimately ended up gaining 557 points for the week.Investors initially were pleased with a large drop in oil prices that began on Nov. 4 on hopes the midterms fallout would lead to a swift resolution of the Iran war. However, barrels of Brent crude increased slightly midweek after President Donald Trump said “we don’t need a deal with Iran,” settling around $96 on Friday afternoon.Inflation also raised its head again this week. On Tuesday, the consumer price index eclipsed expectations, increasing 0.4% compared with the 0.3% most economists forecast. Core inflation, which excludes energy and food prices, rose by 0.3%, also more than expected.Fortunately, the 0.3% increase in the producer price index was slightly less than expected. While the year-over-year numbers are skewed due to no PPI coming out in October 2025 because of the government shutdown, experts say annualized inflation remains too high.The uptick in inflation nearly guarantees the Federal Reserve will raise interest rates by at least 25 basis points when it meets next month. Chris Zaccarelli, chief investment officer at Northlight Asset Management, noted the PPI was not good enough to push the Fed off raising rates.“All of this matters for markets, because a more patient Fed would be easier for stock bulls to navigate, while a more aggressive Fed could prove to be too big of a headwind for the market to overcome next year,” Zaccarelli said.Even before the inflation data was released Fed officials were calling for a rate increase even beyond the expected 25 basis points. In a Tuesday speech at the Bank of England, Fed Governor Christopher Waller said “more robust action by the FOMC may be called for” if inflation data came in hotter than expected.“So, while the precise timing of the hikes doesn’t matter, ensuring that the promised hikes are implemented in a reasonable period of time does,” said Waller, who was appointed to the Fed by Trump.Other economic data this week was mixed. Optimism among small businesses remained roughly flat, according to the monthly index from the National Federation of Independent Business. The index remains just slightly below the 53-year average of 98 points, according to the trade group.Expectations for better business conditions also improved last month after two months of decrease, though one-third of small business owners still report inflation pressures forcing them to raise prices.“There was little change in optimism among small businesses in October as owners navigated enduring challenges, though there were some encouraging developments,” NFIB Chief Economist Bill Dunkelberg said in a statement. “Even with inflation pressures continuing to strain operations, more Main Street owners reported their businesses in good or excellent health, and actual sales improved.”Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads