Wall Street Hits New Peaks on Inflation Reprieve

U.S. equities closed Friday at record highs as softer-than-forecast inflation readings sparked fresh Fed rate cut bets. All three major indexes finished in the green, capping a bullish week.

The Numbers

The Dow Jones surged 1% (472.51 pts) to 47,207.12—breaking through the psychologically important 47K level for the first time ever. The index’s intraday peak hit 47,326.73. Inside the 30 components, winners outnumbered losers 19-11.

The Nasdaq Composite climbed 1.2% (263.07 pts) to 23,204.87, marking another fresh record. Tech giants led the charge, with AMD jumping 7.6%. The S&P 500 gained 0.7% to 6,791.69, also a new closing record.

Sector breakdown: Financials (+1.1%), Utilities (+1.2%), and Tech (+1.6%) powered higher. Energy slipped 1%. The VIX volatility gauge fell 5.4% to 16.37—a sign of cooling market jitters.

Advancers crushed decliners across both exchanges: NYSE saw a 2.18-to-1 ratio favoring ups, while Nasdaq was 2.20-to-1. The S&P 500 posted 34 new 52-week highs vs. four lows; Nasdaq logged 124 new highs against 44 lows.

Inflation Cooler Than Expected

September’s CPI came in hotter year-over-year (up 3% vs. August’s 2.9%) but cooler month-over-month (0.3% vs. forecast 0.4%). Core CPI rose just 0.2% MoM—below the 0.3% estimate.

The takeaway: Markets are now pricing in a 98.9% probability of a 25bp Fed rate cut in October, plus a 91.8% odds of another 0.25% cut in December.

The Broader Picture

Consumer sentiment ticked down to 53.6 (vs. 55.1 last month), though 1-year inflation expectations eased to 4.6%. The week’s rally was buoyed by strong Q3 earnings, soft inflation data, and hopes for looser monetary policy—concerns about the U.S. government shutdown and trade tensions taking a back seat.

For the week: Dow +2.2%, S&P 500 +1.9%, Nasdaq +2.3%.