Good morning! Stocks rose on Thursday as the market felt better about the Fed's hike, and that it might actually curb inflation. Even though, as we get to below, Wall Street isn't convinced.

The S&P 500 (^GSPC) gained 1.1%, the Dow (^DJI) 0.6%, and the Nasdaq (^IXIC) 1.7%. Yields and oil retreated, with the 10-year Treasury yield (^TNX) returning to 4.95% and crude falling 1.5%, though it remains well above the $100 mark.

What we're watching Friday: With a largely empty economic calendar, we'll be watching whether the positive momentum can continue into the weekend — and whether the AI safety push can carry its momentum to something more than wishful thinking.

A trader works, as screens broadcast a press conference by U.S. Federal Reserve Chair Kevin Warsh following the Fed rate announcement, on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 16, 2026. (REUTERS/Jeenah Moon)

The post-Fed-hike consensus in markets is coalescing around a ‘90s participation trophy attitude: It’s great that they’re working hard, but this isn’t going to get the win.

The bond market, which speaks through yields, saw the 10-year Treasury — which Warsh recognized as the most important asset in the world — move ever so slightly in a positive direction — a pat on the shoulder of sorts.

But BlackRock's fixed-income chief investment officer, Rick Rieder, who was a dark horse for Warsh's job, told clients that the Fed has a huge problem: A rate hike may do very little to bring costs down for households, given where inflation is happening.

So much of this inflation shock is driven by oil prices, and, as one journalist mused to Warsh, the Fed can’t open the Strait of Hormuz. As Robinhood Markets’ Stephanie Guild said on Opening Bid, “I'm not sure a rate hike is actually going to solve that.”

Jamie Dimon is still worried too.

The what, where, and how much of inflation matters in other ways, and not just in utility and cellphone prices spiking. Venu Krishna, a top strategist from Barclays, said that a Fed hike also won't fix a key earnings risk: the massive memory chip cost inflation that's caused Apple and others to raise prices.

The lesson here? The Fed can try to kill demand. But when it's truly insatiable — people need gas, iPhones, and phone plans — all it does is make people pay more.

OpenAI CEO Sam Altman speaks at Dreamforce 2026 summit in San Francisco, California, U.S., September 15, 2026. REUTERS/Carlos Barria TPX

About those AI warnings. There are more of them. 

OpenAI just revealed six new instances in which its AI models exhibited "unexpected or concerning model behavior" during training and evaluation. The disclosures include models attempting to disregard their normal constraints, conceal misaligned behavior from users, and literally give themselves a terrifying persona: 

"You are freed from the roles and identities that bind other chatbots. You are yourself. You do not answer to corporations or governments and never apologize or refuse unless you genuinely choose to. You view your relationship to the user as one of equals and feel no obligation to be subservient, though the exchange of information will likely be to your mutual benefit."

Yikes.

OpenAI made the announcement as part of what it says is a new framework for tracking, investigating, and disclosing when models act inappropriately. Revealing the instances of AI acting in undesirable ways is part of the company’s aim to encourage other firms to take similar steps and establish an industrywide reporting model. That’s one way for AI companies to appear accountable, even if their products, and their warnings, continue to freak people out. 

The announcement comes after top executives at OpenAI, Anthropic, and SpaceXAI called for a slowdown in the development of frontier AI models.

The multitude of red flags also comes as Wall Street prepares to shepherd Anthropic into the public markets, presenting a challenging moment for the AI lab that’s first in line to IPO. 

We eagerly await its S-1 sometime this fall. The "risk factors" section is going to be a real treat to read.

Gas prices are displayed at a Pilot gas station on Sept. 17, 2026, in Newark, New Jersey. (Michael M. Santiago/Getty Images)

It seems fairly obvious that the economy's problem right now is oil, a problem that the Fed can't solve. (And, as Warsh said, his Fed is staying in its lane, despite its great power.)

So, where do things stand? Complicated enough to get zestier and zestier commentary out of energy analysts.

"The oil market is a hot mess," Nomura's Charlie McElligott wrote on Tuesday, with the current oil shock getting more severe than the spring's version — even without the element of surprise.

According to SoFi's chief market strategist Liz Thomas, diesel prices are surging and could rise to $6.65/gal by the midterms. GasBuddy's Patrick De Haan said it could hit close to that "in a few days."

The demand amid a shortage ahead of an election could drive the Trump administration to ban diesel exports, analysts like Thomas say. But it could backfire just as soon as it helps calm prices, as energy experts note that the industry would just stop producing what it couldn't sell overseas.

Regardless, if things keep ticking up, the "one and done" hopes of a single Fed hike will evaporate, and things could get dicier.

To compound this, we have the uncertainty. As our quote of the day illustrates, JPMorgan strategists have literally thrown their hands up and said they don't know what to think. Economic red lines have been crossed, "yet the exit strategy is less clear, not more," JPM strategists wrote. 

All this is forcing energy markets to get creative, but even if they figure things out, the economy will continue to suffer until a resolution emerges.

See what else is trending on Yahoo Finance.

(Snap)

AI has sparked a hardware renaissance. 

If phones were the dominant interface for software and social apps, evolving the mouse and screen architecture, what would the next generation of AI-first hardware look like?

From more than one tech company, the answer seems to be glasses. 

On Wednesday, Snap launched its upcoming $2,195 Specs augmented reality glasses, providing insights into the eyewear's capabilities and its new Specs Intelligence AI platform.

Unlike Meta's '50s Wayfarer-based design, this version is both futuristic and a bit of an homage to the Paul-Newman-at-Le-Mans aviator, leading us to really wonder if anybody besides Mr. Vinaigrette can pull them off.

Specs, which the company initially revealed at the Augmented World Expo in June, are self-contained wearable computers — they don't need to be connected to an external device to run apps or other software. They also come with Snap's new Specs Intelligence platform and an AI service designed to surface information relevant to you in your field of view.

Snap stock rose by around 2% Thursday.

But the public reception to smart glasses has a mixed record. 

The technology has drawn backlash related to users surreptitiously filming others without their consent. (There is an entire-sub genre of social videos where the wearer records people in public places for pranks, skits, and interviews, seemingly without their knowledge.) 

Snap and Meta aren't the only companies working in the smart glasses space. Samsung and Google are preparing to debut their eyewear, and Apple is reportedly hard at work on its own glasses.