Stock Market Update

[BRIEFING.COM] The stock market rallied throughout the session, lifting the S&P 500 (+0.8%), Nasdaq Composite (+1.2%), and DJIA (+1.0%) to record intraday and closing highs after the long-awaited September Consumer Price Index (0.3%; Briefing.com consensus: 0.4%) reinforced expectations for two additional Fed rate cuts this year.

The advance was broad-based, with mega-caps exhibiting strong leadership, sending the Vanguard Mega Cap Growth ETF 1.1% higher. 

All of the information technology sector's (+1.6%) mega-cap components traded higher today, helping the sector finish with the widest gain for both the day and the week. 

Intel (INTC 38.28, +0.12, +0.31%) boosted sentiment across chipmaker names after a surprise Q3 earnings beat. 

Additionally, Reuters published a report highlighting IBM's (IBM 307.46, +22.46, +7.88%) belief that Advanced Micro Devices (AMD 252.92, +17.93, +7.63%) processors can effectively run a critical quantum computing error correction algorithm, sending both names sharply higher. The PHLX Semiconductor Index finished with a 1.9% gain. 

Alphabet (GOOG 260.51, +6.78, +2.67%) was a standout in the mega-cap space, moving higher after the company announced a cloud deal with Anthropic yesterday reportedly worth billions of dollars. The communication services sector (+1.3%) finished near the top of the leaderboard. 

The financials sector (+1.1%) was another point of strength, supported by gains across major banking names, while Coinbase Global (COIN 354.46, +31.70, +9.82%) led the sector after JPMorgan upgraded the stock to Overweight from Neutral.

The utilities sector (+1.2%) rounded out the four S&P 500 sectors with gains greater than 1.0% as most of its components finished higher.

As for today's four declining sectors, the energy sector (-1.0%) faced the widest loss, seeing some profit-taking after a strong week that saw it finish with the second-best week-to-date gain. Additionally, crude oil futures settled today's session $0.31 lower (-0.5%) at $61.47 per barrel, though the price of oil still increased over 7% this week.

The materials sector (-0.6%) closed lower, with Newmont Corporation (NEM 83.33, -5.58, -6.28%) lagging despite beating top-and-bottom line expectations. 

Post-earnings price action saw the consumer discretionary sector (-0.1%) finish flattish, as Ford Motor (F 13.83, +1.49, +12.07%) moved higher after beating expectations, while Deckers Outdoor (DECK 86.94, -15.60, -15.21%) lagged. 

The consumer staples sector (-0.4%) also closed with a loss, while the health care sector finished flat. 

Smaller-cap stocks were a point of strength today as the two additional rate cuts before the end of the year remain the most likely policy path. The Russell 2000 gained 1.3%, while the S&P Mid Cap 400 (+0.6%) finished with a more modest gain. 

In addition to today's rate cut optimism and continued mega-cap strength, the market now enters the weekend with the U.S. and China seemingly on better, more conciliatory terms. President Trump will meet with Chinese President Xi next Thursday, hoping to strike a trade deal. 

Today's broad strength highlighted the market's momentum, carrying the major averages to record highs ahead of next week's slate of mega-cap earnings. Alphabet (GOOG 260.51, +6.78, +2.67%), Amazon (AMZN 224.21, +3.12, +1.41%), Apple (AAPL 262.82, +3.24, +1.25%), Meta Platforms (META 738.36, +4.36, +0.59%), and Microsoft (MSFT 523.61, +3.05, +0.59%) all ended the week on a strong note ahead of earnings. 

Investors enter the new week with optimism fueled by softer inflation, expectations for further Fed rate cuts, and signs of progress in U.S.-China trade talks.

U.S. Treasuries finished the week on a generally flat note after overcoming some early post-CPI volatility. The 2-year note yield finished unchanged at 3.48% (+2 basis points this week), and the 10-year note yield settled up one basis point to 4.00% (-1 basis point this week). 

• Nasdaq Composite: +20.2% YTD
• S&P 500: + 15.5% YTD
• Russell 2000: +12.7% YTD
• DJIA: +11.0% YTD
• S&P Mid Cap 400: +5.7% YTD

Reviewing today's data:

• September CPI 0.3% (Briefing.com consensus 0.4%); Prior 0.4%, September Core CPI 0.2% (Briefing.com consensus 0.3%); Prior 0.3%
  • The key takeaway from the report is that CPI and Core CPI were both cooler than expected, which will keep the market thinking that the FOMC will announce a 25-basis point rate cut at the conclusion of next week's policy meeting and should not upset expectations for another cut in December.
• October S&P Global U.S. Manufacturing PMI - Prelim 52.2; Prior 52.0
• October S&P Global U.S. Services PMI - Prelim 55.2; Prior 54.2
• October Univ. of Michigan Consumer Sentiment - Final 53.6 (Briefing.com consensus 55.0); Prior 55.0
  • The key takeaway from the report is that the overall sentiment has remained pressured for the third month in a row amid persistently high inflation expectations.