U.S. stocks reacted sharply to September’s consumer price index inflation figures, with the Dow Jones Industrial Average rising more than 350 points and the S&P 500 and Nasdaq both hitting record highs.
summary
- The U.S. Bureau of Labor Statistics released its Consumer Price Index inflation report for September on Friday.
- U.S. consumer price index (CPI) data showed inflation rose 0.3% in the month, compared to expectations of 0.4%.
- The Dow soared 350 points, and the S&P 500 and Nasdaq hit record highs.
U.S. stocks rose on Friday as markets reacted to sobering inflation data and investors grew hopeful ahead of next week’s Federal Reserve rate cut.
The Dow Jones Industrial Average rose more than 350 points as Wall Street gave an optimistic outlook for the U.S. economy and investors believed stocks could rise further. At the time of writing, the blue chip index was up 0.8%.
Elsewhere, the S&P 500 Index rose 0.8% and the Nasdaq Composite Index rose 1.2%, with both indexes hitting new intraday highs.
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US stocks soar after CPI data
The market is awaiting the release of the September Consumer Price Index report with greater anticipation than in recent months.
Part of that is due to an economic data blackout caused by the government shutdown, which is entering its fourth week.
The main question was what to expect from the US CPI ahead of Friday’s announcement. However, when the time came, the forecast of 0.4% month-on-month turned into 0.3%, which appeared to spark a positive reaction from investors.
The annual inflation rate was 3%, lower than the expected 3.1%, according to CPI data from the Bureau of Labor Statistics. Core CPI, which ignores food and energy, rose 0.2% in September, or an annualized rate of 3%, which was also lower than economists’ expectations of 0.3% month-on-month and 3.1% year-on-year.
Investors are now focused on the Fed, with a 98% to 99% chance of an October rate cut. Expectations for a 25 basis point rate cut in December 2025 rose from 91% to 98.5%, according to the CME FedWatch tool.
In addition to the Fed’s interest rate cut, market sentiment is upbeat as President Donald Trump plans to hold talks with China’s Xi Jinping on trade issues. Strong financial results continue to push up stock prices. Analysts also expect cryptocurrencies to rise amid rising risk asset markets.
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