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U.S. stocks reached new heights on Friday as cool inflation data raised investors’ optimism that the Federal Reserve can stay on its rate-cutting path, boosting the economy and justifying higher valuations for equities.
The Dow Jones Industrials vaulted 389.34 to 46,123.95..
The much broader index jumped 56.44 points to 6,794.88
The NASDAQ regained 270.97 points to 23,212.77.
All three major averages reached new all-time intraday highs in the session.
The September consumer price index report — which was delayed because of the U.S. government shutdown — rose 0.3% on the month, bringing the annual inflation rate to 3%, according to the Bureau of Labor Statistics.
That’s just below the 0.4% and 3.1% that economists polled by Dow Jones had expected. When excluding food and energy, core CPI came in at 0.2% last month and 3% on a 12-month basis, also lighter than the Dow Jones forecasts for 0.3% and 3.1%, respectively.
Following the CPI data, traders increased their bets that the Fed will cut rates at both its remaining two meetings this year. Odds for a December cut initially jumped to 98.5% from roughly 91% odds before the data, per the CME FedWatch tool. Odds for a cut next week remained above 95%.
The markets largely ignored a proclamation from President Donald Trump that he was ending trade negotiations with Canada because of an advertisement used by Ontario featuring former President Ronald Reagan “speaking negatively” about tariffs. The ad, which Trump deemed “FAKE,” quotes Reagan’s presidential radio address from April 1987, in which the former president says that “trade barriers hurt every American worker and consumer” in the long run.
A number of strong earnings results helped sentiment on Friday. Intel shares popped after the chipmaker reported third-quarter sales that exceeded analysts’ estimates. Additionally, Procter & Gamble saw gains following its better-than-expected first-quarter earnings and revenue.
Prices for the 10-year Treasury moved upward, lowering yields to 3.99% from Thursday’s 4.01%. Treasury prices and yields move in opposite directions.
Oil prices gained 38 cents to $62.17 U.S. a barrel.
Gold prices dropped $4.90 to $4,140.70 U.S. an ounce.
