U.S. Stocks Rally as Soft Inflation Strengthens Case for Fed Rate Cuts
U.S. stocks surged on Friday after a mild inflation report increased expectations for Federal Reserve rate cuts later this year.
At 09:35 ET (13:35 GMT), the Dow Jones Industrial Average climbed 240 points (0.5%), the S&P 500 gained 48 points (0.7%), and the NASDAQ Composite rose 235 points (1%). All three major indexes were on track for strong weekly gains.
Inflation Data Boosts Market Sentiment
The Consumer Price Index (CPI) rose 3.0% year-over-year in September, slightly below the 3.1% expected. On a monthly basis, prices increased 0.3%, softer than the 0.4% forecast.
The core CPI, which excludes food and energy, also rose 3.0% annually and 0.2% monthly, both below economists’ projections. The data release had been delayed by the U.S. government shutdown, making it especially significant amid a lack of other official reports.
With the Federal Reserve’s next policy meeting approaching, investors widely expect the central bank to cut interest rates by 25 basis points, followed by another reduction in December.
“With headline and core close to 3.0%, the Fed can cut and signal more easing ahead,” said Francesco Pesole, analyst at ING.
U.S.–China Trade Talks Lift Optimism
Investor confidence improved further after the White House confirmed that President Donald Trump will meet Chinese President Xi Jinping next week during the APEC summit in South Korea.
The planned meeting follows recent trade tensions, including Washington’s 100% tariff threat and Beijing’s export restrictions on rare earth materials. Markets welcomed the potential for renewed dialogue between the world’s two largest economies, which could ease global trade uncertainty.
However, Trump also announced the end of trade talks with Canada, accusing Ottawa of using a “fraudulent” political ad involving the late President Ronald Reagan.
Corporate Earnings Update
Earnings were relatively quiet Friday, though Intel (NASDAQ: INTC) shares jumped after the chipmaker beat third-quarter profit expectations, helped by deep cost-cutting efforts. It was Intel’s first earnings report following major investments from Nvidia and SoftBank, as well as a U.S. government equity stake.
Ford (NYSE: F) stock also gained after the automaker beat profit forecasts on strong SUV and pickup demand. Meanwhile, Target (NYSE: TGT) announced plans to cut 1,800 corporate jobs, or about 8% of its headquarters staff, as part of a major restructuring.
Commodities: Oil Gains, Gold Slips
Oil prices were heading for weekly gains, supported by fresh U.S. sanctions on Russia’s top oil companies, which reignited supply concerns.
- Brent crude rose 0.3% to $66.18 per barrel
- WTI crude added 0.3% to $61.95 per barrel
Both benchmarks were up more than 5% on Thursday and about 7% for the week, marking their strongest performance since mid-June.
Meanwhile, gold prices slipped as investors took profits after recent record highs.
- Spot gold fell 1% to $4,082.61 per ounce
- Gold futures dropped 1.2% to $4,095.00 per ounce
Despite touching all-time highs earlier this week, gold was down over 3% for the week, its largest decline since November 2024.
