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U.S. stocks closed at new heights on Friday as cool inflation data spurred optimism among investors that the Federal Reserve can stay on its rate-cutting path, boosting the U.S. economy and justifying higher valuations for equities.
The Dow Jones Industrials vaulted 472.51 points, or 1%, to 47,207.12.
The S&P 500 index jumped 53.25 points to 6,791.69
The NASDAQ finished higher 263.07 points, or 1.2% to 23,204.87.
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% 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. 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.
Hopes that more rate cuts would stimulate economic activity sent bank stocks higher during the trading day, with key names such as JPMorgan, Wells Fargo and Citigroup each rising more than 2%.
Other names in the financials sector, including Goldman Sachs and Bank of America, similarly advanced.
Prices for the 10-year Treasury moved upward, lowering yields to 4% from Thursday’s 4.01%. Treasury prices and yields move in opposite directions.
Oil prices slid 30 cents to $61.49 U.S. a barrel.
Gold prices deleted $23.00 to $4,122.60. U.S. an ounce.
