U.S. stocks reached new record highs on Friday, driven by investor enthusiasm following a key inflation report that solidified expectations regarding the Federal Reserve’s impending policy decisions.
The Dow Jones Industrial Average climbed 1%, gaining over 450 points. The S&P 500 increased by 0.8%, while the Nasdaq Composite surged 1.2%.
The inflation report for September, released on Friday morning, came in cooler than anticipated. The headline Consumer Price Index (CPI) showed a 3% annual increase, reflecting the highest level since May yet falling short of predictions which had forecasted a 3.1% rise. On a month-over-month basis, prices edged up by 0.3%, indicating a slight moderation from August’s figures and also below market expectations.
This essential report had been postponed due to the ongoing government shutdown, marking the first major economic release amid the closure and providing investors with a crucial update on the health of the economy.
The CPI data did not alter the strong investor sentiment surrounding expectations for a rate cut from the Federal Reserve next week, with nearly 99% of investors anticipating a quarter-point cut, while around 96% foreseeing another reduction in December.
In the backdrop, President Trump stirred fresh uncertainty in trade negotiations by announcing the cancellation of talks with Canada. This move followed a Canadian advertisement opposing his tariff strategies, which notably featured the voice of former President Ronald Reagan.
On the corporate front, Intel’s shares saw a decline after the chip manufacturer reported third-quarter revenues that surpassed Wall Street forecasts. John Pitzer, Intel’s head of investor relations, stated in an interview with Yahoo Finance that the company is well-positioned to expand its role in the artificial intelligence sector.
The overall investor sentiment remains buoyant, indicating optimism for further economic developments.