US stocks opened higher Friday morning after data showed annual inflation heated up in September but less than anticipated, paving the way for the Federal Reserve to cut interest rates at its upcoming policy meetings.
The Dow gained 236 points, or 0.5%. The broader S&P 500 gained 0.65%, and the tech-heavy Nasdaq Composite rose 0.86%. Wall Street’s fear gauge, the VIX, fell 4%.
Consumer prices rose 3% year-over-year in September, according to Bureau of Labor Statistics data. Economists had been expecting an annual rise of 3.1%.
“With the Fed cutting rates – and this report does nothing to stop them from a [quarter-point] cut next week – and corporate profits continuing to increase, it’s hard to see an interruption of this year’s bull market,” Chris Zaccarelli, chief investment officer at Northlight Asset Management, said in an email.
Treasury yields fell as investors scooped up bonds to lock in the current relatively high rates ahead of expected Fed rate cuts. The US dollar slightly weakened against other currencies.
“Tariff-related inflation will remain a concern in the near term, but it is the jobs market that is becoming the more pressing issue for the Fed,” James Knightley, chief international economist at ING, said in a note.
Knightley said he expects the Fed to deliver quarter-point cuts in October and December, followed by additional rate cuts in early 2026.