U.S. Stock Market Rally Reaches New Heights on Economic Optimism
A powerful U.S. stock market rally drove all three major indexes to unprecedented closing highs on Friday. The surge was fueled by a combination of encouraging inflation data and a wave of strong corporate earnings, creating a bullish momentum that sets a positive stage for a critical week ahead.
Inflation Data and Earnings Fuel Record-Breaking Gains
The catalyst for the record-setting session was the Labor Department’s Consumer Price Index (CPI) report for September. While inflation remains elevated, the figures came in slightly cooler than analysts had projected. This alleviated concerns about the outsized impact of tariffs and solidified market expectations for a 25-basis-point interest rate cut by the Federal Reserve at its upcoming policy meeting. The CPI data was particularly significant as it represented a rare piece of official U.S. economic data amid a broader government shutdown that has stalled most statistical releases. “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. The bullish sentiment was further amplified by a robust start to the third-quarter earnings season, with a significant majority of S&P 500 companies exceeding profit and revenue forecasts.
Broad-Based Weekly Advances and Upcoming High-Profile Reports
The Friday rally cemented substantial weekly gains across the board. The S&P 500 and the Nasdaq recorded their largest weekly percentage advances since August, while the Dow Jones Industrial Average logged its most significant Friday-to-Friday jump since June. The earnings season has now shifted into high gear, with 143 S&P 500 companies having reported. Aggregate third-quarter earnings growth is now projected at 10.4% year-on-year, a notable improvement from the 8.8% growth anticipated at the start of the month. “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.” All eyes are now on next week’s earnings roster, which is packed with high-profile results from tech behemoths Meta Platforms, Microsoft, Alphabet, Amazon, and Apple.
Notable Stock Movements and Market Internals
The market’s upward move was broad-based, with advancing issues outnumbering decliners by a ratio of 2.18-to-1 on the NYSE. Several individual stocks posted significant gains. Alphabet shares advanced 2.7% after Anthropic expanded its deal to use Google’s artificial intelligence chips. Coinbase Global jumped 9.8% following an upgrade from JPMorgan. In the automotive sector, Ford surged 12.2% after beating third-quarter profit expectations. However, not all news was positive. Deckers Outdoor saw its shares tumble 15.2% after providing a full-year sales forecast that fell below Wall Street estimates. Alaska Air also slid 6.1% after the carrier cut its annual forecast. Volume on U.S. exchanges was 19.04 billion shares, slightly below the recent full-session average.
