U.S. stocks experienced significant gains on Friday, advancing towards record levels as investors reacted to a pivotal inflation report that reinforced expectations for upcoming policy adjustments by the Federal Reserve. The Dow Jones Industrial Average surged over 1.1%, surpassing a 500-point gain. The S&P 500 climbed 1%, crossing 6,800, while the Nasdaq Composite increased by 1.3%.
Key attention on Friday centered around September’s inflation data, which had been delayed by the ongoing government shutdown. The Consumer Price Index (CPI) report revealed a year-over-year increase of 3%, the highest since May, but slightly below analysts’ forecasts of 3.1%. Month-over-month, the data showed a price rise of 0.3%, lower than August’s figures and also below expectations.
As the first major economic release since the commencement of the government shutdown, the CPI report offered investors a much-anticipated glimpse into the economy. Despite the data, there was overwhelming confidence among investors regarding an imminent rate cut from the Fed at its next meeting. Current predictions indicate a 99% probability of a quarter-point cut next week, with 96% expecting another reduction in December.
In the political arena, President Trump added another layer of uncertainty to trade negotiations with significant U.S. trading partners by announcing the cancellation of trade talks with Canada, citing an advertisement from Canada that criticized his tariff policies and featured former President Ronald Reagan’s voice.
In corporate developments, Intel (INTC) faced volatility; despite reporting third-quarter revenue exceeding Wall Street expectations, shares gave up substantial early gains. John Pitzer, Intel’s head of investor relations, expressed optimism, stating that the company is “well-positioned to play a more significant role in AI.”
Target (TGT) shares remained relatively unchanged as they confirmed layoffs, a contrast to the overall market’s performance, which showed gains of 1% or more.
Additionally, crypto stocks surged in midday trading, benefiting from the favorable inflation data and bolstered investor sentiment regarding the Fed’s potential interest rate cuts. Notable gains included a 3.3% rise in Robinhood (HOOD), a 5.1% increase in Circle (CRCL), a 2.6% climb in Marathon Digital (MARA), and a 5.3% jump in Riot Platforms (RIOT). Coinbase (COIN) shares saw a notable 7% increase following an upgrade to an Overweight rating from JPMorgan, which highlighted monetization prospects tied to a token issuance for Coinbase’s Base blockchain.
Alphabet (GOOGL, GOOG) shares rose nearly 3% following an announcement of a significant chip deal with Anthropic, which involves supplying up to one million custom chips for AI development. This agreement underscores Google’s competitive stance against leading AI chip maker Nvidia (NVDA). Estimates suggest that Google’s TPU business, coupled with its DeepMind AI segment, could be valued at around $900 billion.
Ford (F) shares spiked 9% in early trading after the company reported third-quarter earnings that exceeded expectations. Reports also indicated that Novelis, a crucial supplier for Ford, is set to reopen a plant sooner than expected following a recent fire.
Meanwhile, the 10-year Treasury yield remained stable, hovering just below 4%, after the CPI report affirmed expectations for forthcoming rate cuts. Following the CPI release, investors maintained a strong belief in the Fed’s impending policy changes.
Overall, U.S. stocks began the trading day by gaining ground, driven by positive CPI results which revealed lower-than-expected inflation levels. The market saw several individual stock performances, including Procter & Gamble (PG), which rose 3% after outperforming first-quarter estimates.
On the horizon, major economic indicators are set for release, including the S&P Global U.S. manufacturing and services PMIs, along with new home sales figures, which could further influence market trajectories. As investors navigate through economic uncertainties and corporate strategies, attention remains keenly focused on how these developments will unfold amid the evolving economic landscape.
