Stocks hit record highs on positive U.S. inflation data

U.S. stocks surged to record highs on Friday as major indexes climbed, fueled by data revealing even milder-than-expected inflation last month and bolstering bets on a Federal Reserve interest rate cut at next week’s policy meeting.

Reuters:
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The U.S. Consumer Price Index rose 0.3% last month, slightly less than the expected 0.4%, after climbing 0.4% in August.

“Today’s inflation data shows that we’re not in a crisis like 2022. Prices are growing, but at a controlled pace. That’s good news if you’re hoping the Fed will continue to cut interest rates,” said Callie Cox, chief market strategist at Ritholtz Wealth Management in Charlotte, North Carolina.

The Fed is expected to reduce rates two more times this year, with a quarter-percentage-point cut baked in for the October 28-29 meeting, according to LSEG calculations using rate futures.

The Dow Jones Industrial Average rose 346.77 points, or 0.74%, to 47,081.38, the SP 500 rose 52.67 points, or 0.78%, to 6,791.01, and the Nasdaq Composite rose 251.42 points, or 1.10%, to 23,193.53.

Five of the so-called “Magnificent Seven” U.S. companies at the center of the artificial intelligence boom, including Apple and Microsoft, are due to report earnings next week.

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Probability of the too-late-to-raise, too-late-to-cut Fed cutting rates by at least 25 basis points next month is now even higher.

On interest rates, Powell was way late to hike, then didn’t go nearly high enough, and then started cutting too early. Three strikes and you ought to be out. – MacDailyNews, November 15, 2024

Now Powell is too late to cut. Four strikes and counting.

Receipts:

In July 2023, the Fed stopped raising rates too soon. – MacDailyNews, July 2, 2024

A premature rate cut by the Fed is of higher probability in an election year. – MacDailyNews, April 2, 2024

As we wrote in February 2023, “When certain quarters, including the Fed, delude themselves and others that ‘inflation is transitory’ and waste at least a year before doing a mere portion of what is necessary* (interest rate hikes), the price will be paid for being delusional and late.”

‘Tis best to get a handle on inflation, if you know how, while you still can. – MacDailyNews, May 11, 2021

Stop the misguided crusade against domestic energy production and profligate federal spending and inflation will be stopped dead in its tracks. It’s not difficult. – MacDailyNews, May 11, 2022

For new generations, sometimes tough lessons have to be retaught and learned the hard way. As we go through this, remember: It’s always darkest before the dawn. – MacDailyNews, July 14, 2022

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