US Equity Indexes Hit All-Time Highs as Soft Inflation Print Raises Odds for Two More Rate Cuts This Year

01:25 PM EDT, 10/24/2025 (MT Newswires) -- US equity indexes broke records as cooling consumer price inflation reinforced market expectations that the Federal Reserve will cut interest rates two more times this year.

The Nasdaq Composite climbed 1.3% to 23,238.2, after hitting a record 23,246.546 level earlier in the session. The S&P 500 advanced 0.8% to 6,793.7, also scaling a new peak of 6,806.42 intraday. The Dow Jones Industrial Average rose 1.1% to 47,239.7, posting in earlier trading an all-time high of 47,326.73.

Technology, utilities, and communication services emerged as the top gainers intraday.

The consumer price index rose 0.3% month-over-month in September, below August's seven-month high of 0.4%, according to the Bureau of Labor Statistics. A Bloomberg-polled consensus expected a 0.4% gain. Annually, inflation accelerated to 3% from 2.9% but remained below the 3.1% estimate. The annual index had fallen to a growth of 2.3% in April.

Core inflation, which excludes the volatile food and energy components, slowed to 0.2% from 0.3%, bringing the annual core measure to 3% from 3.1%. The market expected both metrics to remain unchanged. The annual growth rate is the lowest in three months.

"September's inflation report came in a bit softer than expected, thanks to a sharp cooling in primary shelter costs," Thomas Feltmate, senior economist at TD Economics, said in a report. "Elsewhere, there were plenty of signs to suggest that elevated inflationary pressures are likely to persist in months ahead."

The probability of a 25 basis-point reduction in interest rates in December rose to 94% by Friday afternoon from 91% on the previous day, according to the CME Group's FedWatch Tool. The likelihood of a cut of the same magnitude next week is 97%.

The University of Michigan consumer sentiment index for October was revised down Friday to 53.6 from a preliminary estimate of 55.0, versus expectations for 54.5 in a survey compiled by Bloomberg. The print was below the final reading of 55.1 in September.

Meanwhile, respondents in the Michigan survey anticipated a 4.6% inflation rate over the next year, lower than the 4.7% recorded in the previous month. The rate over the next five years was seen at 3.9%, up from 3.7% in September.

Most US Treasury yields traded mixed. The 10-year yield was steady at 3.99%, albeit leaning to the upside. The two-year yield was also little changed at 3.48% but leaned toward the downside.

In company news, Ford Motor (F) shares jumped more than 11% intraday, the leader on the S&P 500, after the automaker reported better-than-expected Q3 results.

Deckers Outdoor (DECK) reported fiscal Q2 earnings and sales that beat, but its fiscal 2026 forecast for net sales missed expectations. Shares sank 13% intraday, the steepest decline on the S&P 500.

IBM (IBM) reported it has run a key quantum computing algorithm on readily available Advanced Micro Devices (AMD) chips, bringing the company a step closer to commercializing supercomputers, Reuters reported Friday. IBM's (IBM) shares jumped 7.6% intraday, the Dow's top gainer. AMD shares were up 6.8% intraday, the top performer on the Nasdaq.

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