What we covered here
• The September CPI inflation report showed that prices rose at a slower-than-expected rate of 0.3% last month, but annual price hikes for a range of consumer goods rose at the fastest pace so far this year.
• Wall Street rallied after the data release, as it likely cements another rate cut from the Federal Reserve at its meeting next week.
• This is the first and only piece of official economic data the federal government has released this month, due to the shutdown. The White House said Friday that the October inflation report likely would not be released at all.
• Economists had predicted the data would show that annual inflation ticked up in September to 3.1% from 2.9% in August and rose 0.4% on a month-to-month basis.
Our live coverage of the September CPI report has ended. Read more about US inflation here.
Stocks are hovering in record high territory
US stocks were set to close higher on Friday, with the Dow, S&P 500 and Nasdaq Composite all on pace for record highs.
The Dow was up 542 points, or 1.16%, as of 2:55 p.m. ET. The blue-chip index was on track to close above 47,000 for the first time ever.
The S&P 500 gained 0.94%, and was flirting with closing above 6,800 points for the first time. The tech-heavy Nasdaq gained 1.25%.
The top three performing stocks in the Dow were IBM (IBM), Goldman Sachs (GS) and JPMorgan Chase (JPM), which rose 7.8%, 4.15% and 2.5%, respectively.
Wall Street’s fear gauge, the VIX, fell 5.6%, signaling relative calm in markets.
“It’s not time to chase risk, but it’s not time to hide either,” Gina Bolvin, president at Bolvin Wealth Management Group, said in an email. “Investors should lean into quality names, companies with margin strength and sectors that can weather stubborn inflation.”
The 10-year Treasury yield traded around 4% and was relatively unchanged.
“Looking ahead, uncertainty may rise,” Christian Floro, market strategist at Principal Asset Management, said in an email. “The White House has indicated that the October inflation report may not be released next month, which increases the weight placed on today’s figures and raises the risk that policymakers will be making decisions with less clarity on the near-term inflation trajectory.”
The Federal Reserve meets next week to review monetary policy, with a decision on interest rates expected at 2 p.m. ET on Wednesday.
Here's how inflation stacks up so far this year
The pace of consumer inflation as reflected in the Consumer Price Index has slowed since reaching a peak of 9.1% during the pandemic, but the journey to the Federal Reserve’s target rate of 2% on its preferred inflation gauge, the Personal Consumption Expenditures index, continues to be bumpy.
Here's what's moving in the stock market
Stocks were higher Friday afternoon as investors embraced optimism about potential Federal Reserve rate cuts.
The Dow was up 515 points, or 1.1%. The S&P 500 gained 0.95%. The tech-heavy Nasdaq rose 1.3%.
All major indexes were set to finish the week with gains of more than 2%. The S&P and Nasdaq were set for their best week since early August; the Dow was on track for its best week since early July.
About 70% of stocks in the S&P 500 were rising. Ford shares (F) rose 11% and led the market higher after the automaker posted strong third-quarter earnings results.
Similarly, about 70% of stocks in the tech-heavy Nasdaq 100 were gaining. Shares of chipmaker Advanced Micro Devices (AMD) rose 6.8% and led the index higher.
In the 30-company Dow, about two-thirds of stocks were rising. IBM shares (IBM) gained 7% and led the index higher.
AMD and IBM shares rose after Reuters reported that a research paper will be published on Monday showcasing IBM’s ability to run a quantum computing algorithm on AMD chips.
One of the most actively traded stocks on Friday was Beyond Meat (BYND). Shares sank 19%. The plant-based food company emerged as a meme stock in recent days, with retail investors sending shares soaring roughly 128% and 146% on Monday and Tuesday, respectively.
Why the cost of coffee is wildly volatile
Coffee prices dropped by 0.1% on a monthly basis in September, following August’s 3.6% monthly rise, according to Consumer Price Index data released Friday. But compared to last September, Americans are paying 18.9% more for coffee.
And Americans may need to brace for prices to get even higher if President Donald Trump follows through on his threat to enact steeper tariffs on Colombian shipments. Already, coffee from Brazil, the top country the United States purchases coffee from, faces a 50% levy.
With very little coffee grown domestically, higher tariffs on Colombia, the number-two coffee exporter for the United States, would all but certainly make a cup of joe more expensive.
The Trump administration is investigating whether China is abiding by its trade agreement. It could lead to higher tariffs
United States Trade Representative Jamieson Greer announced on Friday that he’s initiating an investigation into whether China is adhering to the terms of a trade agreement President Donald Trump brokered during his first term.
As part of the agreement, China committed to increasing purchases of American products by $200 billion by the end of 2021. However, it fell short of that level. The agreement also made changes to practices regarding intellectual property protects and technology transfers.
The Section 301 investigation Greer is initiating, which could take months to complete, may pave the way for Trump to levy higher tariffs on Chinese goods.
The announcement comes as trade tensions between the United States and China have recently escalated and also ahead of a high-stakes meeting next week with Trump and Chinese President Xi Jinping. The meeting will mark the first time the two leaders have met face-to-face in six years.
Inflation is "uncomfortably high" and likely to get worse, Moody’s economist Mark Zandi says
Even though Wall Street is celebrating the better-than-feared inflation report, some economists worry the worst may not be over when it comes to prices.
“Inflation is uncomfortably high and is set to accelerate further in the coming months,” Mark Zandi, chief economist at Moody’s Analytics, told CNN in an email on Friday.
Zandi noted that while the cost of electricity, rent and used cars all eased in September, that likely won’t continue.
The fingerprints of tariffs continue to be visible in some places, including prices for meat, clothes, furniture, appliances and coffee.
The Trump administration’s immigration crackdown may also be impacting price hikes for personal services, Zandi said.
The inflation report showed significant monthly increases in the price of moving/storage services (1.3%) as well as hospital and related services (0.8%). Prices on elderly home care spiked 7%, the most on record.
“Inflation is firmly above the Federal Reserve’s direct,” Zandi said, “and the direction of travel is for even higher inflation going into next year.”
Dow gains 500 points as cooler-than-expected inflation data fuels rally
Wall Street was set to end the week on a high note with the Dow, S&P 500 and Nasdaq Composite all rising to fresh record highs.
The Dow rose 533 points, or 1.14%, pushing it above the 47,250 mark. The S&P 500 rose 1%, lifting it above the 6,800 mark. The tech-heavy Nasdaq gained 1.3%.
Stocks jumped higher this morning after Consumer Price Index data for September showed annual inflation heated up less than expected.
“All else equal, today’s CPI report should give the Fed the green light to focus its efforts on the health of the labor market,” Jason Pride, chief of investment strategy and research at Glenmede, said in an email. “As long as incoming data signal more risk to employment than to inflation, the Fed’s policy path likely points toward additional easing.”
Fed rate cuts could lower savings rates and borrowing rates, encouraging spending and investing while stimulating business activity, creating a sustained tailwind for the stock market. A rate cut can also lower bond yields, making higher-yielding assets like stocks more appealing for investors.
Elsewhere in markets, Treasury yields ticked lower but pared earlier, steeper declines. The US dollar index was flat.
Hassett says “decelerating” inflation will ease pressure on Fed
President Donald Trump’s top economic adviser Kevin Hassett said Friday that inflation is “decelerating,” a sign he believes will “take all the pressure off” the Federal Reserve as it decides whether to continue with rate cuts.
“It was a really good report for a number of reasons,” Hassett, who is head of the National Economic Council, told Fox Business from the White House lawn. “It went down a little bit from August,” he continued. “Our expectation is that inflation is decelerating, and that will take all the pressure off the Fed to keep on the path that they’re on,” Hassett added.
The September Consumer Price Index report showed prices rose 0.3% last month, a slightly slower pace than economists had expected. That likely paves the way for the Fed to cut rates again, at its policy meeting next week.
Here's what Wall Street is saying about the latest inflation data
Stocks jumped higher Friday morning after data showed inflation was cooler than expected in September.
The Dow was up 415 points, or 0.89%. The S&P 500 rose 0.88%, and the tech-heavy Nasdaq gained 1.2%. Each of the major indexes notched intraday record highs.
Here’s what investors and economists are saying about the latest Consumer Price Index data:
- “Inflation coming in weaker than expected further solidifies a continuation of the Federal Reserve’s rate cutting cycle, at least for the next two meetings.” — Skyler Weinand, chief investment officer at Regan Capital.
- “For the Fed, concerns about the job market still outweigh frustrations with inflation.” — Bill Adams, chief economist at Comerica Bank.
- “Signs of spillovers from tariffs remain weak and support the view that tariff hikes will translate into a one-off bump in prices instead of persistent inflationary pressures.” — Krishna Guha, vice chairman at Evercore ISI.
- “I was a little surprised [the inflation data] came in light.” — Thomas Martin, senior portfolio manager at Globalt Investments. “I still think that inflation is a risk.”
- “There is still a large amount of uncertainty about the ultimate price impact of tariffs in the coming quarters.” — Matt Stucky, chief portfolio manager for equities at Northwestern Mutual Wealth Management. “However, the observed impact so far has been lower than expectations which, coincident with a weakening labor market, has allowed for a resumption in easing from the Federal Reserve.”
Consumer sentiment declines this month over concerns about prices, not the government shutdown
Americans remain concerned about the higher cost of living and are mostly unfazed by the economic effects of the federal government shutdown.
Consumer sentiment fell 1.5 points in October to a final reading of 53.6, the University of Michigan said Friday in its latest survey. A preliminary reading earlier this month showed that sentiment was mostly flat.
That’s the seventh-lowest reading on records going back to 1952.
October’s weak reading mostly reflects persistent concerns about inflation, and showed souring attitudes among middle-age and older Americans as younger consumers felt more upbeat.
“Overall, consumers perceive few material changes in economic circumstances from last month; inflation and high prices remain at the forefront of consumers’ minds,” Joanne Hsu, the survey’s director, said in a release.
The government shutdown’s impact is spreading through the economy, but it’s not yet registering with Americans’ feelings about the economy more broadly.
“There was little evidence this month that consumers connect the federal government shutdown to the economy,” Hsu said. “Only about 2% spontaneously referenced the shutdown during this month’s interviews, compared with the 10% of consumers who did so in January 2019 during that 35-day shutdown.”
Mortgage rates are at their lowest level of the year
The average rate on a 30-year fixed mortgage fell to 6.19% this week, marking the lowest level so far this year, according to data from mortgage giant Freddie Mac.
Lower mortgage rates and softer home prices might be improving the housing affordability picture for many Americans still looking to break in to homeownership.
September sales of existing homes reached the highest pace in seven months, the National Association of Realtors reported Thursday.
“As anticipated, falling mortgage rates are lifting home sales,” Lawrence Yun, NAR’s chief economist, said in a statement.
Shelter, as the CPI report defines the cost of housing, makes up the largest chunk of the inflation report, making it the single-biggest driver of inflation readings. Friday’s report for the month of September showed that housing-related inflation continued to slow.
Read more here.
Dow gains 400 points as stocks clinch intraday record highs
Wall Street cheered on Friday as a cooler-than-expected inflation report sent stocks to record highs.
The Dow rose 411 points, or 0.88%. The S&P 500 gained 0.9%. The tech-heavy Nasdaq Composite gained 1.2%. Each of the major indexes notched intraday record highs.
Wall Street’s fear gauge, the VIX, fell 5%.
“So many people have been expecting a sharp increase in inflation and have positioned bearishly as a result, but the market is likely to keep squeezing the shorts until they realize that the economy – and corporate America – is more resilient than many expected,” Chris Zaccarelli, CIO at Northlight Asset Management, said in an email.
White House says there likely won't be any October inflation report
White House press secretary Karoline Leavitt celebrated Friday’s Consumer Price Index report, which showed headline inflation came in slightly below economists’ expectations.
But she said in a post on X: “Democrats choosing to keep the government closed will likely result in no October inflation report, which will leave businesses, markets, families, and the Federal Reserve in disarray.”
Besides Friday’s inflation report, the government has paused all other economic reports due to the lapse in funding from the shutdown, which began on October 1.
Stocks open higher as inflation data supports Fed rate cut hopes
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.
Inflation means families must spend $208 more per month than a year ago
Inflation doesn’t need to be runaway to stretch family budgets.
Due to higher prices, the typical American household in September had to spend $208 more than a year earlier to buy the same goods and services, according to Moody’s Analytics data shared with CNN on Friday.
When compared with the start of 2021, when inflation started to really heat up, the typical household must spend an extra $1,043 each month for the same goods and services.
The findings demonstrate the snowballing effect inflation can have, shrinking how far paychecks go.
It’s true that the inflation rate is not nearly as high as during the Biden years – nor as high as some economists had predicted.
And yet prices are still increasing at an uncomfortably fast pace. Worse, they’re rising from elevated levels following historically high inflation.
Wages are up, too. But often only by enough to keep up with higher prices.
Social Security benefits will inch up 2.8% in 2026
Social Security recipients will receive a 2.8% boost in their monthly benefits in 2026, the Social Security Administration announced Friday. However, many seniors say the annual adjustments haven’t been enough to cover their ever-rising expenses.
The increase for 2026 is larger than the 2.5% cost-of-living-adjustment that beneficiaries received for this year, but far smaller than the ones when inflation was running rampant.
The annual adjustment, known as a COLA, is based on an inflation metric from the third quarter of the year. Inflation has moderated after being at around a four-decade high in 2022.
The increase was scheduled to be announced last week but was delayed by the federal government shutdown.
New inflation data could give Fed more confidence to continue cutting
Even though inflation increased last month, from an annual rate of 2.9% to 3%, it was less than the pickup economists were anticipating. While the Federal Reserve is missing key employment data due to the government shutdown, Friday’s Consumer Price Index report should give central bankers enough confidence to cut rates at their meeting next week.
“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,” Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management, said in a note Friday morning, Rosner also said a December cut is likely.
US inflation is back at 3%
The cost of living got even more expensive for Americans last month, with prices rising at the fastest pace in more than year.
Consumer prices rose 0.3% in September, which drove the annual rate of inflation from 2.9% to 3%, the highest it’s been since January, according to Bureau of Labor Statistics data released Friday.
Economists were expecting that inflation would continue to pick up speed, rising 0.4% for the month and 3.1% from the year before, according to FactSet estimates.
The cost of gas has been falling. Trump's sanctions on Russia could change that
Gas prices could rise on the Russia oil sanctions, eroding one bright spot in America’s stubborn inflation fight.
The surprising decision to punish Russia, the second-biggest crude oil producer on the planet, instantly sent oil prices surging this week.
The challenge for President Donald Trump is how to break the Russian war machine without causing a painful price spike that would exacerbate lingering frustrations about the cost of living among voters.
Record-high gas prices haunted the Biden-Harris administration after Russia invaded Ukraine in 2022. And high prices across the economy helped propel Trump back to the White House.
Now, Trump is trying to force an end to that deadly war while keeping gas prices low. It’s a risky strategy.
Read more here.
