US stocks reached record highs on Friday, driven by investor optimism following a pivotal inflation report that suggests a favorable environment for upcoming Federal Reserve policy adjustments. The Dow Jones Industrial Average climbed over 450 points, marking a 1% increase that pushed it above the significant threshold of 47,000 for the first time. The S&P 500 gained 0.8%, while the Nasdaq Composite jumped 1.2%, reflecting broad market gains.
The September inflation data released in the morning showed a 3% year-over-year increase in the Consumer Price Index (CPI), aligning closely with previous expectations but slightly below forecasts of a 3.1% rise. Month-over-month, inflation rose by 0.3%, dipping slightly from August’s figures and also undercutting predictions. This report, delayed due to the ongoing government shutdown, served as a crucial barometer for the economy, offering investors insight during a period of uncertainty.
Market sentiment remained strong regarding expectations for a rate cut from the Federal Reserve, with nearly 99% of traders anticipating a quarter-point reduction at next week’s meeting. Additionally, around 96% foresee another cut in December, reflecting confidence that the central bank will respond to the cooling inflation data.
In political news, President Trump added another layer of uncertainty to trade relations by announcing the cancellation of trade talks with Canada. This decision stemmed from a Canadian advertisement opposing his signature tariffs, which prominently featured the voice of former President Ronald Reagan.
In earnings news, Ford experienced a notable 13% surge after posting better-than-expected quarterly results, with adjusted earnings per share reaching $0.45 against an anticipated $0.36. Revenue also surpassed expectations by recording $47.185 billion compared to forecasts of $43.7 billion, bolstering investor confidence in the automaker’s performance.
On the technology front, Intel’s shares saw a decline after initially rising post-earnings, despite reporting third-quarter revenue that exceeded Wall Street estimates. John Pitzer, Intel’s head of investor relations, expressed optimism about the company’s positioning in the AI space during an interview.
Conversely, gold prices slipped slightly to capped a tumultuous week, retreating less than 1% during Friday’s trading. The metal had previously seen fluctuations, losing 5.5% from all-time highs earlier in the week but managed to recover some losses as the week progressed.
In the realm of cryptocurrencies, stocks soared as investor sentiment around potential Fed rate cuts bolstered confidence in digital assets. Robinhood gained 3.3%, Circle rose 5.1%, and shares of Coinbase climbed 7% after an upgrade from JPMorgan, which recognized its monetization opportunities through potential new tokens.
Alphabet saw its stock rise nearly 3%, buoyed by a significant chips deal with AI firm Anthropic. Under this agreement, Google’s custom chips will aid in enhancing Anthropic’s AI capabilities, posing potential competition to established chipmaker Nvidia.
The 10-year Treasury yield remained steady below 4% following the CPI announcement, suggesting stable interest rate expectations among investors. Meanwhile, Target’s shares remained stable despite the announcement of job cuts, reflecting a cautious market response.
Overall, the combination of favorable inflation data, corporate earnings outperforming expectations, and investor speculation about future Fed policy created a buoyant atmosphere on Wall Street, with multiple indices reaching new milestones.
