Traders work on the floor of the New York Stock Exchange on July 23, 2025 in New York City.
Spencer Platt | Getty Images
U.S. stocks closed at new heights on Friday as cool inflation data spurred optimism among investors that the Federal Reserve can stay on its rate-cutting path, boosting the U.S. economy and justifying higher valuations for equities.
The Dow Jones Industrial average rose 472.51 points, or 1.01%, to 47,207.12, securing its first close above the 47,000 level ever. The S&P 500 added 0.79% to 6,791.69, while the Nasdaq Composite climbed 1.15% to 23,204.87. All three major averages closed at records.
The September consumer price index report — which was delayed because of the U.S. government shutdown — rose 0.3% on the month, bringing the annual inflation rate to 3%, according to the Bureau of Labor Statistics. That’s just below the 0.4% and 3.1% that economists polled by Dow Jones had expected. When excluding food and energy, core CPI came in at 0.2% last month and 3% on a 12-month basis, also lighter than the Dow Jones forecasts for 0.3% and 3.1%, respectively.
Following the CPI data, traders increased their bets that the Fed will cut rates at both its remaining two meetings this year. Odds for a December cut initially jumped to 98.5% from roughly 91% odds before the data, per the CME FedWatch tool. Odds for a cut next week remained above 95%.
Hopes that more rate cuts would stimulate economic activity sent bank stocks higher during the trading day, with key names such as JPMorgan, Wells Fargo and Citigroup each rising 2%. Other names in the financials sector, including Goldman Sachs and Bank of America, similarly advanced.
To be sure, the headline annual rate did represent a slight uptick from the prior month. Most government economic data — including weekly and monthly jobs figures — remains postponed because of the shutdown.
“There was little in today’s benign CPI report to ‘spook’ the Fed and we continue to expect further easing at next week’s Fed meeting,” said Lindsay Rosner, head of multi sector fixed income investing at Goldman Sachs Asset Management. “A December rate cut also remains likely with the current data drought providing the Fed with little reason to deviate from the path set out in the dot plot.”
The markets largely ignored a proclamation from President Donald Trump that he was ending trade negotiations with Canada because of an advertisement used by Ontario featuring former President Ronald Reagan “speaking negatively” about tariffs. The ad, which Trump deemed “FAKE,” quotes Reagan’s presidential radio address from April 1987, in which the former president says that “trade barriers hurt every American worker and consumer” in the long run.
Ontario Premier Doug Ford said later Friday that his province is going to pause airing the ad after this weekend’s World Series games so that U.S.-Canada trade talks can restart.
Major indexes notched their second winning week in a row, with all three gaining around 2%. The S&P 500 is now up 15% for the year, and the Nasdaq is up 20%.