- US inflation undershoots forecasts: Sept CPI rose just 3.0% YoY (3.0% core) vs 3.1% expected [1], fueling stocks and deepening bets on Fed rate cuts [2] [3].
- Fed officials all eyes: Multiple Fed speakers (Bowman, Waller, Miran, Kashkari, Barr) are on the calendar today [4]. Markets now fully price a 25bp cut at next week’s FOMC meeting [5] [6].
- Wall Street hits highs: Major indexes climbed – the Nasdaq jumped ~0.9%, S&P 500 +0.6%, Dow +0.3% on Oct.23 [7] – as tech/AI earnings buoyed sentiment. Analysts warn “signs of a bubble” as AI stocks surge [8].
- Global market drivers: Trump confirmed a Trump–Xi summit, easing trade fears [9]. Europe’s STOXX600 was flat on Oct 24 but set for a weekly gain [10]. US shutdown (day ~25) delays data, but investors “look past” it [11].
- Key data out: Philadelphia Fed manufacturing index plunged to −12.8 in Oct (from +23.2) [12], signalling a sharp US factory slowdown. Oil spiked on new sanctions while gold eased from record highs [13] [14].
Markets Rally as US Inflation Cools
Wall Street surged on Oct. 24 after data showed US consumer prices rose less than forecast. The Labor Department’s CPI for September came in at 3.0% year-on-year (3.0% core) vs 3.1% expected [15]. That miss drove a rally in stock futures and sent the US dollar slightly lower, while gold and bonds rallied on renewed rate-cut hopes [16] [17]. As Reuters notes, the dollar index was steady (around 99.06) ahead of the report [18], and traders now fully price a quarter-point Fed cut next week [19] [20].
“In midday trading, futures on the S&P 500 jumped about 0.3%, while Nasdaq futures were up 0.5%,” one market summary notes. On Oct.23, all three major US indices closed higher – Nasdaq +0.9%, S&P +0.6%, Dow +0.3% [21] – led by technology and industrial stocks. For example, Tesla shares erased early losses and closed +2% after earnings, and Intel stock surged over 3% after hours on strong profit news [22]. Commodities also rallied: US crude jumped ~5% (to about $62/bbl) on sanctions news, and gold rebounded near $4,130/oz after its prior drop [23].
Analysts note the stock rally comes amid very low volatility. “It’s just a continuation of a broadly supportive environment for equities,” says Peter Fitzgerald, Aviva Investors’ macro CIO [24]. Indeed, US markets are at record highs (S&P ~6750, Nasdaq >23,000) and have climbed ~15–18% YTD [25]. Much of the gain is driven by tech and AI – Nvidia is up ~41% YTD, Palantir +143% [26] – and semiconductor and internet giants. But some caution is building: “there are signs of a bubble” as traders pour money into AI, Reuters warns [27].
Fed Policy and Data Drought
With the Fed’s Oct 28–29 meeting days away, all eyes are on policy. Following the CPI miss, Fed officials are firmly expected to cut rates by 25bp. A Reuters poll shows nearly all (115 of 117) economists expect a cut next week [28] (and many expect another in December). Futures markets imply almost a 100% chance of an Oct rate cut [29] [30]. Even Fed Chair Powell has signalled a focus on cooling growth.
However, policymakers face a dearth of data due to the continuing US government shutdown. Nomura economist David Seif cautions officials are “just flying blind” without fresh jobs or inflation figures [31]. Indeed, official employment numbers haven’t been updated since early Sept, and surveys suggest a slowing labor market. One Reuters summary notes Fed economists lack clarity: “We cannot know [the labor market] until we see the report,” Seif said [32]. In this vacuum, the Fed is divided: some, like Kansas City Fed’s Esther George, argue rates are already “at the right place” to temper inflation [33], while others (e.g. Fed Governor Stephen Miran) say rates are “far too high and inflation is about to drop” [34].
Still, the inflation data so far only strengthens the dovish tilt. U.S. core inflation running at ~3.0% (vs Fed’s 2% target) leaves room for policy easing [35] [36]. Fed minutes released this week showed many officials leaning toward more cuts (futures now price in a second 25bp cut in Dec) [37]. One strategist warns markets expect relief: “Investors expect the Fed to continue cutting rates,” but any surprise hawkish turn could spook the rally [38].
Global Markets & Currencies
Overseas, equity markets held up: Asia stocks gained on the Trump–Xi meeting news (stocks near 10-year highs in China), and Europe opened flat to lower. Europe’s STOXX 600 slipped about 0.2% on Oct.24 (still poised for a weekly gain) while London’s FTSE 100 was flat [39]. The dollar traded near multi-week highs, buoyed by Fed rate-cut certainty. The yen weakened (¥152.9 per dollar) after Japan’s new prime minister pledged stimulus [40]. The euro stayed around $1.161 after stronger-than-expected PMI data [41]. The Canadian dollar eased (C$1.402 per USD) after President Trump abruptly “terminated” new trade talks with Canada [42]; overall market reaction to that news was mild.
Commodities saw mixed moves: Oil prices (WTI ~$62) were up ~5% midweek on sanctions against Russian oil firms, then stabilized [43]. Gold gave back earlier gains, trading around $4,058/oz on Oct.24 [44]. Notably, gold has broken $4,000 earlier this month [45] amid risk hedging. Metals funds saw record inflows last week as investors sought “insurance” (gold has rallied ~53% YTD) [46].
Tech & Sector Highlights
The tech sector remains the market’s engine. Most of the “Magnificent Seven” (Apple, Microsoft, etc.) report earnings next week [47]. Intel already beat forecasts, pushing its stock higher [48]. Tesla and chipmakers (Nvidia, AMD) continue to lead gains. Some analysts caution stretch valuations: “a brief pullback was quickly erased by dip-buyers” [49], but others say momentum favors bulls for now [50].
Financials and housing also drew attention. TS2.tech notes Dominion Energy is now viewed as a defensive pick (solid dividend + data-center contracts) [51]. In Canada, housing starts are expected (forecast ~255k for Sept) and Canada’s core retail sales recently disappointed [52]. US homebuilders also report: the NAHB index likely crept up to ~33 in October [53].
Analysis & Outlook
Analysts generally see markets remaining buoyant into year-end, though with risks. The consensus is for two more Fed cuts (Oct and Dec) [54]. As one HSBC economist notes, Fed officials are roughly split “between labor market and inflation risks” [55] – a difficult policy mix. Aviva’s Fitzgerald thinks lower rates and calming volatility will keep stocks supported [56]. But he (and others) warn a top may form in tech stocks eventually [57].
Today’s events will be crucial. The surprise CPI pullback suggests inflation is easing, which should reinforce Fed dovishness. Fed speakers in the next 24 hours will also color expectations. If Fed chair Powell or governors emphasize still-high inflation, it could temper the rally. Conversely, dovish tones could ignite further stock gains. Meanwhile, high-flying tech names and AI plays are on watch. For example, tech-stock models forecast strong growth: Nvidia is projecting AI-data center spending that implies a ~42% annual revenue growth through 2030 [58].
In sum, global markets are in a delicate balance: the Fed is expected to ease monetary policy, which supports equities, but growth is slowing and inflation is still above target. Economist David Seif puts it simply: “We are flying blind” without clear data [59]. Investors will be watching today’s CPI details (released despite the shutdown) and any surprise in central bank communications. If inflation continues to cool and no new shocks emerge, stocks may extend their rally – but all agree a correction or shift is possible once monetary policy or fundamentals change.
Sources: Latest market reports and expert commentary from Reuters, XTB, TradingView, and financial analysts [60] [61] [62] [63] [64], among others.
References
1. www.xtb.com, 2. www.xtb.com, 3. www.reuters.com, 4. www.tradingview.com, 5. www.reuters.com, 6. ts2.tech, 7. www.investopedia.com, 8. www.reuters.com, 9. www.reuters.com, 10. www.reuters.com, 11. ts2.tech, 12. www.nasdaq.com, 13. www.reuters.com, 14. www.investopedia.com, 15. www.xtb.com, 16. www.xtb.com, 17. www.reuters.com, 18. www.reuters.com, 19. www.reuters.com, 20. www.reuters.com, 21. www.investopedia.com, 22. www.investopedia.com, 23. www.investopedia.com, 24. www.reuters.com, 25. ts2.tech, 26. ts2.tech, 27. www.reuters.com, 28. www.reuters.com, 29. ts2.tech, 30. www.reuters.com, 31. www.reuters.com, 32. www.reuters.com, 33. www.reuters.com, 34. www.reuters.com, 35. www.reuters.com, 36. ts2.tech, 37. ts2.tech, 38. ts2.tech, 39. www.reuters.com, 40. www.reuters.com, 41. www.reuters.com, 42. www.reuters.com, 43. www.investopedia.com, 44. www.reuters.com, 45. ts2.tech, 46. ts2.tech, 47. www.reuters.com, 48. www.reuters.com, 49. ts2.tech, 50. ts2.tech, 51. ts2.tech, 52. www.xtb.com, 53. www.tradingview.com, 54. www.reuters.com, 55. www.reuters.com, 56. www.reuters.com, 57. www.reuters.com, 58. ts2.tech, 59. www.reuters.com, 60. www.xtb.com, 61. www.reuters.com, 62. www.reuters.com, 63. ts2.tech, 64. ts2.tech
