Quick Summary
- Major US stock indices, including the S&P 500, Dow Jones, and Nasdaq 100, traded higher, influenced by a slightly weaker-than-expected US CPI report.
- The CPI data suggested potential room for the Federal Reserve to cut interest rates, despite ongoing inflation concerns.
- Positive manufacturing and services PMI reports provided additional support, while consumer sentiment dipped.
- Market sentiment was also affected by trade negotiations and the ongoing US government shutdown.
- Q3 earnings season continues, with a high percentage of S&P 500 companies beating forecasts, though profit growth is expected to slow.
Market Performance Driven by Inflation Data and Economic Reports
The S&P 500 Index saw a gain of +0.79%, the Dow Jones Industrials Index rose by +0.66%, and the Nasdaq 100 Index increased by +1.04%. December E-mini S&P futures were up +0.68%, and December E-mini Nasdaq futures climbed +0.89%.
💡 Stock markets are trading higher today, largely influenced by the latest US Consumer Price Index (CPI) report. The figures released were slightly below market expectations, which could provide the Federal Reserve with more flexibility to consider interest rate reductions.
The September CPI report indicated a monthly increase of +0.3% and an annual increase of +3.0%, falling short of the anticipated +0.4% month-over-month and +3.1% year-over-year. Similarly, the core CPI report also showed a +0.3% month-over-month rise with a +3.1% annual increase, which was slightly below forecasts.
📊 While the immediate market reaction to the CPI report was positive, it’s important to note that the year-over-year CPI increase of +3.0% matches a 16-month high. Furthermore, the core CPI’s +3.0% year-over-year figure remains significantly above the Federal Reserve’s target inflation rate of +2.0%.
Additional support for stocks came from the October S&P US Manufacturing PMI, which registered at 52.2, an increase of +0.2 points and surpassing the expectation of remaining unchanged at 52.0. The October S&P US Services PMI also performed strongly, rising by +1.0 point to 55.2, exceeding the forecast of a -0.7 point decline to 53.5.
📍 On the downside, the final October University of Michigan US Consumer Sentiment Index experienced a decline of -1.4 points, settling at 53.6. This was weaker than the market’s expectation of a more modest -0.5 point drop to 54.5.
Trade Tensions and Government Shutdown Impact Market Sentiment
Tensions in trade relations resurfaced as President Trump announced the termination of trade negotiations with Canada. This decision was reportedly triggered by an anti-tariff advertisement released by the provincial government of Ontario, which featured former President Reagan’s 1987 address in favor of free trade.
⚡ President Trump characterized the advertisement as deceptive, suggesting it was intended to influence the US Supreme Court’s upcoming review on November 5 concerning the legality of his reciprocal tariffs. Lower courts have previously ruled these tariffs illegal, based on claims of emergency authority. Should the Supreme Court uphold these rulings, the US government might be required to refund collected tariffs, potentially limiting the President’s authority to impose future tariffs.
📌 Market participants are closely watching US-China trade talks, with President Trump having previously threatened to increase tariffs on Chinese goods if a deal is not reached by November 1. A meeting between President Trump and Chinese President Xi Jinping is scheduled for next Thursday on the sidelines of the Asia-Pacific Economic Cooperation conference in South Korea.
✅ The ongoing US government shutdown, now in its fourth week, continues to weigh on market sentiment and delay the release of critical economic data. This shutdown is preventing the publication of key reports, including the weekly initial unemployment claims for the past four weeks and the September payroll report. Bloomberg Economics estimates that approximately 640,000 federal workers will be furloughed, which could lead to an increase in jobless claims and push the unemployment rate to an estimated 4.7%.
Earnings Season and Global Market Performance
This week, the focus remains on corporate earnings as the Q3 earnings season progresses. Positive earnings reports are providing a bullish backdrop for the stock market.
📊 According to Bloomberg Intelligence, 85% of S&P 500 companies that have reported their Q3 results so far have exceeded forecasts. This trend is on track to represent the strongest earnings quarter since 2021. However, projected Q3 profit growth is expected to be +7.2% year-over-year, marking the slowest increase in two years. Additionally, Q3 sales growth is anticipated to slow to +5.9% year-over-year, down from +6.4% in the second quarter.
Overseas stock markets showed mixed performance on Friday. The Euro Stoxx 50 declined by -0.26%, while China’s Shanghai Composite closed up +0.71%, and Japan’s Nikkei Stock 225 recorded a gain of +1.35%.
Interest Rate Outlook and Bond Market Movements
December 10-year T-notes saw a modest increase of +2 ticks, leading to a decrease in the 10-year T-note yield by -1.2 basis points to 3.989%. T-notes rebounded from earlier losses following the release of the slightly weaker-than-expected US CPI report.
💡 The 10-year breakeven inflation expectations rate also declined by -2.4 basis points to 2.279%.
📍 T-notes are receiving ongoing support from the persistent US government shutdown. The shutdown’s potential to increase job losses, reduce consumer spending, and weaken the overall US economy could create conditions for the Federal Reserve to continue its program of interest rate cuts.
✅ Market participants are currently pricing in a 97% probability of a -25 basis point rate cut at the upcoming FOMC meeting scheduled for October 28-29.
European government bond yields presented a mixed picture. The 10-year German bund yield increased by +3.5 basis points to 2.618%, while the 10-year UK gilt yield decreased by -0.4 basis points to 4.420%.
📊 Swaps markets are indicating a 1% chance of a -25 basis point rate cut by the European Central Bank (ECB) at its policy meeting on October 30.
Notable US Stock Movers
The Magnificent Seven stocks were predominantly trading higher today, with the exception of Tesla (TSLA), which experienced a -1.5% decline. Among the notable gainers, Alphabet (GOOG) saw a +2.4% increase, while Nvidia (NVDA) and Amazon (AMZN) posted gains of over 1%.
⚡ Crypto-related stocks are showing positive momentum today, with Bitcoin up +1.2% and Ethereum up +3.2%. Coinbase (COIN) surged more than +5% following an upgrade from JPMorgan to overweight from neutral, citing reduced risk and increasing monetization opportunities. Riot Platforms (RIOT) rose more than +3%, and MARA Holdings (MARA) gained over +2%.
💡 Ford (F) experienced a significant increase of over +8% after reporting earnings that surpassed analyst expectations and expressing optimism about recovery following a disruptive fire at a key supplier.
📍 Newmont (NEM) declined by more than -7% after the company forecasted that its gold production in 2026 might not exceed 2025 levels.
❌ Deckers Outdoor (DECK) fell by more than -13% after reporting disappointing net sales projections for 2026.
Upcoming Earnings Reports (10/24/2025)
- Booz Allen Hamilton Holding Co (BAH)
- First Hawaiian Inc (FHB)
- General Dynamics Corp (GD)
- Gentex Corp (GNTX)
- HCA Healthcare Inc (HCA)
- Illinois Tool Works Inc (ITW)
- Procter & Gamble Co/The (PG)
Expert Summary
US stock indices traded higher today, buoyed by a slightly softer-than-expected CPI report that hints at potential Fed rate cuts. Manufacturing and services PMI data also supported market gains, although consumer sentiment dipped. Trade developments and the ongoing government shutdown remain key factors influencing market sentiment, while Q3 earnings season continues with generally positive results.