Stocks Pop as Cooler CPI Keeps Fed on the Cutting Path

With input from CNBC, Axios, CNN, ABC News, and Bloomberg.

Wall Street woke up to exactly the print it wanted. Futures climbed Friday after inflation came in a touch softer than expected, reviving hopes the Federal Reserve can keep trimming rates into year-end despite the data drought from Washington’s shutdown.

Contracts tied to the Dow were up about 200 points, roughly 0.4%, with S&P 500 futures ahead 0.6% and the Nasdaq 100 up 0.8%. The spark was September CPI rising 0.3% on the month and 3% year over year, shy of the 0.4% and 3.1% economists were braced for. Strip out food and energy and the picture looked even tamer: core prices rose 0.2% on the month and 3% on the year, again lighter than forecasts. That’s still an uptick from August’s 2.9% headline pace, but the direction relative to expectations matters most for a market obsessed with the Fed’s next move.

With most federal stats frozen by the shutdown, this CPI release has been elevated to kingmaker status. It’s the only official read the Fed gets before next week’s policy meeting, and traders promptly doubled down on a cut then and another in December. According to CME FedWatch, the odds of a quarter-point move next week stayed pinned near certainty, while December’s probability jumped to almost 99%.

“There was little in today’s benign CPI report to spook the Fed,” said Lindsay Rosner, who runs multi-sector fixed income at Goldman Sachs Asset Management.

In her view, easing next week still looks like the base case, with December likely to follow given the lack of contradictory data.

The upbeat tone persisted even as politics tried to intrude. President Donald Trump’s broadside against Canada — declaring trade talks dead over a TV ad he blasted as “fake” — barely registered in futures. Markets instead latched onto micro news and earnings beats. Intel rallied in early trading after topping sales estimates and talking up demand, while Procter & Gamble gained after posting stronger-than-expected revenue and profit and sticking with its full-year outlook. Crypto stocks caught a bid as well, with Coinbase edging higher after a JPMorgan upgrade, while bitcoin hovered above the $110,000 mark.

Thursday’s advance put the major indexes in position to chalk up a winning week, with the S&P 500 pacing for roughly a 1.1% gain and the Dow and Nasdaq close behind. Tech remains the weather vane: heavyweight AI names like Nvidia and Oracle helped lead yesterday’s rebound, and investors are leaning into the heart of earnings season looking for confirmation that margins and capex plans can withstand tariffs and slower hiring.

Under the surface, the CPI details were familiar. Gasoline was the biggest monthly gainer, food rose modestly, shelter cooled a bit, and core goods showed signs of tariff pass-through without the kind of shock that would rattle the Fed. That’s the sweet spot for a market that wants lower rates without a growth scare. The real debate now shifts to the path after December. Inflation is still above the Fed’s 2% target, the labor market has softened, and tariff policy is a wild card. For today, though, the takeaway is simple: cooler-than-feared inflation keeps the easing story alive — and stocks like the sound of that.