Stock market today: Dow, S&P 500, Nasdaq surge to records as tame inflation cements Fed rate cut bets

US equities surged to record highs on Friday, with the Dow, S&P 500, and Nasdaq all posting significant gains, as cooler-than-expected September CPI data (3% annually, 0.3% MoM) solidified market expectations for Federal Reserve rate cuts, with a near-unanimous consensus for a quarter-point cut next week. This positive sentiment fueled strong corporate performances, including Ford's 13% rally on robust earnings, Intel's gains after topping revenue estimates and highlighting its AI role, and Alphabet's rise on a major AI chip deal with Anthropic. Conversely, Deckers Brands slumped over 10% after lowering guidance due to tariff concerns, while President Trump's cancellation of trade talks with Canada introduced geopolitical uncertainty.

Analysis

US equities surged to record highs, with the Dow, S&P 500, and Nasdaq all posting significant gains, driven by cooler-than-expected September CPI data. Headline CPI rose 3% annually, below the 3.1% forecast, and month-over-month prices increased 0.3%, solidifying market expectations for Federal Reserve rate cuts, with 99% odds priced in for a quarter-point cut next week. This dovish sentiment also kept the 10-year Treasury yield below 4%.

Strong corporate earnings provided additional tailwinds, exemplified by Ford's (F) 13% rally after beating Q3 estimates with $0.45 EPS and $47.185 billion revenue. Intel (INTC) also closed positive after topping revenue forecasts and emphasizing its AI role, while Alphabet (GOOGL) rose nearly 3% on a major deal to supply Anthropic with up to 1 million custom AI chips. This highlights increasing competition in the AI chip market, including from Amazon (AMZN) and Nvidia (NVDA).

However, geopolitical uncertainty emerged as President Trump canceled trade talks with Canada, potentially impacting future trade relations. This was underscored by Deckers (DECK) slumping over 10% after lowering guidance due to anticipated tariff impacts. Gold (GC=F) also retreated less than 1% to cap a volatile week, reflecting broader market shifts and risk-off sentiment in precious metals.

Key Decisions for Investors

• Maintain vigilance on upcoming Fed communications for confirmation of the rate cut trajectory and any shifts in economic outlook.
• Evaluate corporate exposures to AI and robust earnings reports, particularly in sectors demonstrating strong growth and strategic positioning.
• Assess portfolio vulnerability to geopolitical trade tensions and sector-specific risks, such as those highlighted by tariff impacts on consumer discretionary companies.