New York —
A positive release of inflation data on Friday ignited an end-of-week rally in the stock market, allowing the Dow, S&P 500, and tech-heavy Nasdaq Composite to reach new record highs. The Dow Jones Industrial Average jumped 473 points, or 1.01%, settling at 47,207.12, marking its first close above 47,000.
The broader S&P 500 index rose by 0.79%, while the Nasdaq increased by 1.15%. Additionally, Wall Street’s volatility index, known as the VIX, dropped 5%, signifying increased investor confidence.
The rally was fueled by the Consumer Price Index data for September, which revealed an annual inflation increase that was lower than analysts had anticipated. This indicator has shifted expectations toward potential interest rate cuts by the Federal Reserve in their upcoming meetings next week and in December. Lower interest rates can decrease borrowing costs, thus stimulating spending and investment, which in turn bolsters business activity and supports a bullish market trend.
Corporate earnings also played a significant role in the day’s market performance, with Ford Motor Company experiencing a remarkable 12% surge following a strong report for its third-quarter earnings, its best day since 2020.
Bob Doll, CEO of Crossmark Global Investments, noted, “When the Fed is lowering rates and earnings are good, markets don’t go down very much. That’s where we find ourselves.” He emphasized that strong earnings are a key driver for stock prices.
The S&P 500 and Nasdaq both enjoyed their most successful week since early August, while the Dow had its best performance since early July. Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management, suggested that with anticipated Fed rate cuts and continuous corporate profit growth, any interruption in the ongoing bull market appears unlikely.
Looking ahead, investors will be attentive to a series of earnings reports from major firms, including Microsoft and Apple. The dynamics surrounding US-China trade relations will also be in focus, especially as President Donald Trump is set to meet with Chinese leader Xi Jinping at the Asia-Pacific Economic Cooperation summit in South Korea.
This combination of factors positions the market for a potentially favorable outlook as economic signals and corporate health appear to align positively.