All three major U.S. stock indexes gained about 2% for the week, extending the previous week’s rally and pushing the S&P 500, NASDAQ, and Dow to new record highs.
Friday’s Consumer Price Index report showed inflation rising slightly less than expected, with prices up 3.0% year over year in September versus economists’ forecasts of 3.1%. Most other economic data releases remained delayed due to the ongoing government shutdown, though the inflation report was issued to meet a legal deadline for benefits linked to inflation.
Bond markets continued to reflect confidence in an upcoming Federal Reserve rate cut at its meeting, concluding Wednesday. As of Friday, futures pricing indicated a 97% likelihood of a quarter-point cut, according to CME FedWatch. It would mark the Fed’s second rate reduction of the year, following one in mid-September.
Midway through earnings season, large-cap technology companies remain the primary driver of corporate profit growth. According to FactSet, the “Magnificent Seven” are projected to post average third-quarter earnings growth of 14.9%, compared with 6.7% for the remaining S&P 500 constituents.
Gold’s nine-week winning streak ended, with futures dipping to around $4,120 per ounce on Friday afternoon after reaching a record high near $4,350 on Monday.
U.S. crude oil prices rebounded after three consecutive weekly declines, gaining nearly 7% to around $61.50 per barrel following new U.S. sanctions on major Russian producers. Despite the rise, oil remained well below its mid-June high of $75.
In Japan, equities surged to record highs after Sanae Takaichi secured parliamentary backing to become prime minister. Markets responded positively to her support for expansionary fiscal and monetary policies.
Meanwhile, U.S. consumer sentiment continued to weaken. The University of Michigan’s October reading fell to 53.6 from 55.1 in September, marking the fourth straight monthly decline. Concerns over inflation and a softening labor market remained the key drivers of the downturn.