Wall Street Hits Record Highs as Inflation Cools and Investors Eye Fed Rate Cuts

U.S. stock markets surged on Friday, closing at record highs after fresh government data showed inflation rose slightly less than expected last month — a sign that price pressures are cooling without threatening economic growth.

Inflation Eases, Fueling Optimism for Rate Cuts

The Consumer Price Index (CPI) rose just 0.3% in September, slightly below forecasts of 0.4% and down from August’s pace. The data bolstered confidence that the Federal Reserve will cut interest rates at its upcoming October 28–29 policy meeting, likely by a quarter percentage point, according to LSEG futures data.

“We’re well past the inflation chaos of 2022,” said Callie Cox, chief market strategist at Ritholtz Wealth Management. “Price growth has leveled out, which is encouraging news for consumers and investors anticipating more rate cuts ahead.”

Analysts expect the Fed could lower rates two more times before year-end, potentially fueling more market momentum.

Stocks Soar on Inflation Relief and Strong Earnings

The upbeat economic news sparked a rally across Wall Street. The Dow Jones Industrial Average climbed 472.51 points (+1.01%) to close at 47,207.12. The S&P 500 gained 53.25 points (+0.79%) to 6,791.69, while the Nasdaq Composite jumped 263.07 points (+1.15%) to 23,204.87.

All three indexes ended the week higher — the S&P 500 and Nasdaq marking their strongest weekly gains since August, while the Dow logged its best performance since June.

Strong corporate earnings also lifted investor sentiment. Ford Motor (F.N) surged 12.2% after posting better-than-expected third-quarter profits. Analysts now project S&P 500 earnings growth of 10.4% year-over-year, up from early October estimates of 8.8%.

Global Markets Rally on U.S. Data

The rally extended beyond the U.S. The MSCI World Index rose 0.63% to a record 1,001.37, while Europe’s STOXX 600 also hit a fresh high, gaining 0.23%.

Meanwhile, the U.S. dollar index held steady near 98.92, with the euro edging up to $1.1629 and the yen weakening slightly to 152.8 per dollar.

Eurozone business activity showed an unexpected uptick in October, pushing European bond yields higher, while U.S. Treasury yields were largely unchanged. The benchmark 10-year Treasury yield settled near 4%, marking its fourth consecutive weekly decline.

Oil and Gold Cool After Volatile Week

Oil prices, which had spiked earlier in the week after President Donald Trump’s administration imposed sanctions on Russian energy firms, eased as traders questioned how aggressively the White House would enforce them. U.S. crude slipped $0.29 to $61.50 per barrel, and Brent dipped $0.05 to $65.94.

Spot gold also retreated, down 0.57% to $4,101.29 per ounce, as investors rotated back into equities amid renewed optimism about the economy.