Stocks rallied to new heights on Friday as the release of long-awaited inflation data boosted outlooks that the Federal Reserve can continue to cut interest rates through the end of the year.
The Dow Jones Industrial Average
In the spotlight, September's consumer price index (CPI) report showed monthly inflation rising at a less-than-expected 0.3%, according to the Bureau of Labor Statistics' report on Friday, bringing the annual inflation rate to 3%. Excluding food and energy prices, so-called core-CPI rose by 0.2% over August and 3% year-over-year -- both also coming in cooler than expected.
The reading, which was delayed by the U.S. federal shutdown, spurred positive momentum and led market participants to increase their bets that the Federal Reserve will lower interest rates at both their October and December policy meetings; odds for each meeting producing a cut of at least 25 basis points rose above 95%, according to CME Group's FedWatch tool.
Elsewhere in economic news, consumer sentiment slightly weakened in October as inflation outlooks increased, the University of Michigan's survey showed on Friday. Headline sentiment declined 2.7% from September to bring the latest reading to 53.6. Annually, consumer sentiment dropped 24% in October.
Consumers' one-year inflation expectations decreased to 4.6%, marking the lowest reading since July, while the five-year outlook increased to 3.9%, its highest rate since June.
"Overall, consumers perceive few material changes in economic circumstances from last month; inflation and high prices remain at the forefront of consumers' minds. There was little evidence this month that consumers connect the federal government shutdown to the economy," said Joanne Hsu, director of the Surveys of Consumers, in a statement.
Investors showed little concern for President Donald Trump's latest tariff announcement on Friday, stating that he was ending trade negotiations with Canada due to an advertisement by Ontario Premier Doug Ford which uses former President Ronald Reagan's radio address from April 1987 -- the former president states that "trade barriers hurt every American" in the long run.
Trump wrote in a post on his social media platform Truth Social that Ontario's ad "misrepresents" what Reagan's speech was about, arguing that "they only did this to interfere with the decision of the U.S. Supreme Court," referring to a major pending legal challenge to some of his tariffs on Canada.
On Friday, Ford said his province will pause running the ads after the World Series this weekend, stating in a post on X that "our intention was always to initiate a conversation about the kind of economy that Americans want to build and the impact of tariffs on workers and businesses."
"We've achieved our goal, having reached U.S. audiences at the highest levels," Ford added.
Looking ahead, market participants are turning their attention towards the Federal Open Market Committee's next policy decision due out Wednesday afternoon, followed by remarks from Fed Chair Jerome Powell.
The week's key earnings reports include tech heavyweights Microsoft
