Stocks Rally to Records as Cooling Inflation Strengthens Fed Rate Cut Outlook – US Market Wrap

Wall Street experienced a relief rally as lower-than-expected inflation reinforced trader confidence in Federal Reserve interest-rate cuts.

Stocks extended their October gains, with the S&P 500 reaching all-time highs on bets that policy easing will boost corporate earnings. Treasuries’ initial surge faded after manufacturing and service surveys showed economic resilience.

Traders welcomed the slowest pace of underlying inflation in three months, after flying almost blind due to a lack of economic data since the start of the US shutdown. The September core consumer price index rose 0.2% from August. On an annual basis, it increased by 3%.

The US government will most likely be unable to release inflation data for October, the White House said Friday, citing the ongoing government shutdown.

The S&P 500 rose nearly 1%, briefly reaching 6,800. Treasury two-year yields fell one basis point to 3.48%. The dollar fluctuated.