Stocks Surge to Record Highs as Inflation Data Signals Fed Cuts

UPDATE: Stocks soared to record highs today as new inflation data confirmed investors’ hopes for continued interest rate cuts by the Federal Reserve. The latest report from the Bureau of Labor Statistics revealed that consumer prices rose by only 3% year-over-year in September, falling below economists’ expectations and signaling a potential easing of tariff pressures.

This key inflation figure, released shortly after 9:30 a.m. ET, has energized traders, pushing major stock indexes to new heights. The S&P 500 reached 6,792.33, climbing by 0.8%. The Dow Jones Industrial Average rose to 46,734.61, up 0.7%, while the Nasdaq Composite surged to 23,198.70, marking a 1.14% increase.

Despite the inflation rate still exceeding the Federal Reserve’s 2% target, the 3% reading indicates that tariffs are not significantly affecting consumer prices, alleviating some economic concerns. Olu Sonola, head of US economic research at Fitch Ratings, noted,

“As odd as it may seem, the Fed will be happy with inflation staying around 3% for the next couple of months. The tariff passthrough generally remains muted, as the focus shifts squarely to a weakening labor market.”

The latest data is critical as it is the first major economic indicator released since the government shutdown on October 1. It comes amid signs of a cooling labor market, with various reports indicating that payroll growth is slowing and layoffs are increasing at U.S. companies.

Chris Zaccarelli, chief investment officer at Northlight Asset Management, emphasized the resilience of the current bull market, stating,

“We understand that valuations are high and there are risks in the market, but with the Fed cutting rates — and this report does nothing to stop them from a 25-bps cut next week — and corporate profits continuing to increase, it’s hard to see an interruption of this year’s bull market.”

Looking ahead, Zaccarelli cautions that while the market appears robust now, 2026 may present new challenges. “Next year will bring new challenges,” he said, “but we wouldn’t advise getting in the way of the upward trend between now and year-end.”

Investors and analysts alike will be closely monitoring the upcoming Federal Reserve meeting for any indications of future rate cuts, as the market remains poised for further growth amid these favorable conditions.