Wall Street hits record highs as cool inflation fuels Fed rate cut hopes

Wall Street indexes scaled record highs on Friday, driven by cooler-than-expected inflation data that buoyed bets for faster rate cuts by the Federal Reserve, while upbeat earnings from Intel kept investor optimism alive around AI. 

US consumer prices increased slightly less than expected in September, prompting traders to bring forward their rate cut forecasts. They now anticipate three quarter-point reductions by March instead of April. 

"It's quite positive (the data) and it certainly clears the way for the Fed to cut rates next week and leads to a higher expectation of at least two more cuts (by March)," said Eric Gerster, chief investment officer at AlphaCore Wealth Advisory. 

 

The Fed is set to cut rates by 25 basis points in its policy meeting scheduled on October 29. 

The economic picture, however, remains murky, with business activity showing a tepid rebound in October. The White House warned that next month's inflation data may not be released due to the government shutdown, now into its 24th day. 

At 09:54 a.m., the Dow Jones Industrial Average rose 366.58 points, or 0.78 per cent, to 47,101.19. The S&P 500 gained 53.54 points, or 0.79 per cent, to 6,791.75, while the Nasdaq Composite advanced 235.12 points, or 1.03 per cent, to 23,176.92. 

The rate-sensitive Russell 2000 index rose 0.9 per cent. 

Intel jumped 4 per cent after the chipmaker smashed third-quarter profit estimates, adding to a wave of upbeat US earnings and boosting the Nasdaq. 

AMD and Micron Technology gained 5.7 per cent and 3.4 per cent, respectively. Nvidia rose 1.9 per cent. 

The Philadelphia SE Semiconductor Index added 1.8 per cent, hitting an all-time high. 

Consumer goods bellwether Procter & Gamble topped first-quarter estimates on strong demand for its beauty and hair-care products, sending its shares up 1.1 per cent. 

Financials also gained 1.1 per cent. 

Intel's beat set the tone for a blockbuster week ahead, with five of the 'Magnificent Seven' tech titans, including Apple and Microsoft, set to report their results. 

Earlier this week, Tesla and Netflix reported lackluster results, weighing on market sentiment. 

TRADE JITTERS REMAIN 

Global markets found a moment of calm after the White House confirmed that US President Donald Trump will meet his Chinese counterpart Xi Jinping next week during his Asia tour. 

The announcement sparked hopes of easing trade tensions between the world's two largest economies, which have been strained by tit-for-tat tariffs and export restrictions. 

Meanwhile, Trump terminated all trade talks with Canada after a Canadian political advertisement used the voice of the late US President Ronald Reagan to criticize tariffs. 

Among other stock movers, Alphabet rose 2.4 per cent after Anthropic said it would use tens of billions of dollars' worth of Google's AI chips to train its Claude chatbot. 

Hoka sneakers maker Deckers Outdoor forecast full-year sales below Wall Street estimates, sending its shares down 14.4 per cent. 

Ford added 9.3 per cent after the carmaker's third-quarter profit beat expectations. 

Alaska Air dropped 4 per cent after the airline cut its annual forecast and a tech outage led to flights being grounded before operations were restored. 

Advancing issues outnumbered decliners by a 4.14-to-1 ratio on the NYSE and by a 3.24-to-1 ratio on the Nasdaq.

The S&P 500 posted 25 new 52-week highs and one new low, while the Nasdaq Composite recorded 76 new highs and 15 new lows.