NEW YORK (Reuters) -Cooler-than-expected inflation data and upbeat corporate earnings lifted all three major U.S. stock indexes to record closing highs on Friday, setting the stage for next week’s earnings reports and an expected interest rate cut by the Federal Reserve.
The S&P 500 and the Nasdaq recorded their largest weekly percentage gains since August, while the blue-chip Dow logged its biggest Friday-to-Friday jump since June.
The Labor Department’s Consumer Price Index remained elevated in September but was a bit cooler than analysts had expected, calming fears of an outsized impact of tariffs on inflation and all but locking in a 25-basis-point rate cut at the conclusion of the Fed’s monetary policy meeting next week.
The CPI report provided a rare set of official U.S. data as releases have generally ground to a halt during the current government shutdown driven by a congressional budgetary impasse.
“We got some good news on the inflation front as the benign CPI data opened the door for Fed rate cuts next week and likely in December,” said Ryan Detrick, chief market strategist at Carson Group in Omaha.
Third-quarter earnings season has shifted into overdrive, with 143 of the companies in the S&P 500 having reported, according to LSEG data.
Analysts now expect third-quarter S&P 500 earnings growth of 10.4% year-on-year in aggregate. That marks a robust improvement over the 8.8% annual growth expectations as of October 1, per LSEG.
“It’s been a spectacular start to earnings season,” Detrick added. “We’ve seen 87% of companies beat on earnings and 83% on revenue, justifying the rally we’ve seen this year and likely opening the door for a strong end-of-year rally as well.”
Next week’s earnings roster is packed with high-profile results from Meta Platforms, Microsoft, Alphabet, Amazon.com and Apple – five of the “Magnificent Seven” group of megacap momentum stocks. Additional market movers include industrial firms Caterpillar and Boeing.
According to preliminary data, the S&P 500 gained 53.77 points, or 0.79%, to end at 6,791.60 points, while the Nasdaq Composite gained 262.22 points, or 1.14%, to 23,204.02. The Dow Jones Industrial Average rose 472.33 points, or 1.01%, to 47,206.94.
Alphabet gained ground after Anthropic expanded its deal with Google to use as many as one million of the tech giant’s artificial intelligence chips to train its Claude chatbot.
Procter & Gamble rose after the consumer products company’s earnings topped Wall Street estimates due to strong demand for its beauty and hair-care products.
Coinbase Global got a boost after JPMorgan upgraded the stock to “overweight” from “neutral.”
Deckers Outdoor forecast full-year sales below Wall Street estimates, sending shares of the Hoka sneakers maker sliding.
Ford jumped after beating third-quarter profit expectations. General Dynamics also surpassed estimates, sending its shares higher.
Alaska Air slid after the airline cut its annual forecast.
(Reporting by Stephen Culp; Additional reporting by Pranav Kashyap and Twesha Dikshit in Bengaluru; Editing by Ronojoy Mazumdar, Shinjini Ganguli, Shilpi Majumdar and Richard Chang)
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