The S&P 500 Index ($SPX) (SPY) on Friday rose by +0.79%, the Dow Jones Industrials Index ($DOWI) (DIA) rose by +1.01%, and the Nasdaq 100 Index ($IUXX) (QQQ) rose by +1.04%. December E-mini S&P futures (ESZ25) rose by +0.74%, and December E-mini Nasdaq futures (NQZ25) rose by +1.00%.
The S&P 500 and the Nasdaq 100 indexes both rallied to new record highs on Friday. Stocks found support from the slightly weaker-than-expected US CPI report, which gave the Fed a bit more latitude to cut interest rates. The Sep CPI report of +0.3% m/m and +3.0% y/y was slightly weaker than market expectations of +0.4% m/m and +3.1% y/y. Also, the Sep core CPI report of +0.2% m/m and +3.0% y/y was slightly weaker than market expectations of +0.3% m/m and +3.1% y/y.
While the markets reacted favorably to Friday’s CPI report, the Sep CPI report of +3.0% y/y rose to match the current 16-month high, and the core CPI report of +3.0% y/y was still far above the Fed’s inflation target of +2.0%.
Stocks also saw support from Friday’s Oct S&P US manufacturing PMI report of +0.2 to 52.2, stronger than expectations of unchanged at 52.0. Also, the Oct S&P US services PMI report of +1.0 to 55.2 was stronger than expectations for a -0.7 point decline to 53.5.
On the negative side, Friday’s final-Oct University of Michigan US consumer sentiment index fell -1.4 points to 53.6, which was weaker than market expectations of a -0.5 point drop to 54.5.
Stocks were undercut when President Trump late Thursday announced he had terminated trade negotiations with Canada, citing an anti-tariff advertisement released by the provincial government of Ontario that apparently hit a nerve with Mr. Trump. The ad featured former US President Reagan speaking out in a 1987 address in favor of free trade and against tariffs, calling tariffs an outdated idea that stifles innovation, drives up prices, and hurts US workers.
Mr. Trump claimed the ad was deceptive and said it was designed to influence the US Supreme Court ahead of oral arguments on November 5 on the legality of Mr. Trump’s reciprocal tariffs. Lower courts have already deemed Mr. Trump’s reciprocal tariffs illegal, ruling the tariffs are based on a specious claim of emergency authority. If the US Supreme Court upholds those rulings, the US government will have to refund the tariffs already collected, and Mr. Trump’s power to impose tariffs will be limited to well-founded sections of US trade law.
Later in the day, Ontario said it plans to pause the anti-tariff ad campaign. Also, Canadian Prime Minister Carney said Canada is prepared to resume trade talks “when the Americans are ready.”
The markets are focused on US-China trade talks, as President Trump reiterated his threat on Monday to boost tariffs on Chinese goods “if there isn’t a deal” by November 1. President Trump is scheduled to meet Chinese President Xi Jinping next Thursday on the sidelines of the Asia-Pacific Economic Cooperation conference in South Korea.
The US government shutdown continues into its fourth week, weighing on market sentiment and delaying key economic reports. The government shutdown is delaying the release of government reports, including the last four weeks of weekly initial unemployment claims and the September payroll report. Bloomberg Economics estimates that 640,000 federal workers will be furloughed during the shutdown, which would expand jobless claims and push the unemployment rate up to 4.7%.
The markets are focused on earnings results as the Q3 earnings season continues. Positive corporate earnings expectations are a bullish backdrop for stocks. According to Bloomberg Intelligence, 85% of the S&P 500 companies that have reported so far have beaten forecasts, on course for the best quarter since 2021. However, Q3 profits are expected to have risen by +7.2% y/y, the smallest increase in two years. Also, Q3 sales growth is projected to slow to +5.9% y/y from 6.4% in Q2.
Overseas stock markets on Friday closed higher. The Euro Stoxx 50 closed up +0.11%. China’s Shanghai Composite closed up +0.71%. Japan’s Nikkei Stock 225 closed up +1.35%.
Interest Rates
December 10-year T-notes (ZNZ5) fell -1 tick, while the 10-year T-note yield fell -0.4 bp to 3.997%. T-notes rebounded from early losses on the slightly weaker-than-expected US CPI report. Also, the 10-year breakeven inflation expectations rate fell by -0.6 bp to 2.298%.
T-notes have support from the ongoing US government shutdown, which could lead to additional job losses, reduced consumer spending, and a weakened US economy, potentially allowing the Fed to continue cutting interest rates.
The markets are discounting a 97% chance of a -25 bp rate cut at next week’s FOMC meeting on Oct 28-29.
European government bond yields rose. The 10-year German bund yield rose +4.3 bp to 2.626%. The 10-year UK gilt yield rose +0.8 bp to 4.432%.
Swaps are discounting a 1% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30.
US Stock Movers
The Magnificent Seven stocks on Friday closed higher, except for the -3.4% decline in Tesla (TSLA). Alphabet (GOOG) and Nvidia (NVDA) both showed gains of more than +2%.
There were some notable gains in chip stocks Friday, which supported gains in tech stocks and the overall market. Advanced Micro Devices (AMD) rallied more than +7%, and Micron Technology (MU) rallied more than +5%. Broadcom (AVGO), Arm Holdings (ARM), and Lam Research (LRCX) rallied more than +2%. Intel (INTC) rose +0.3% on a favorable earnings report and strong revenue guidance.
Crypto stocks saw support on Friday, with Bitcoin up +1% and Ethereum up +2.7%. Also, Coinbase (COIN) rallied more than +9% on an upgrade from JPMorgan to overweight from neutral due to some risk abatement and increasing monetization opportunities. Riot Platforms (RIOT) rallied +4.5%, and MARA Holdings (MARA) rallied +1.7%.
Ford (F) rallied more than +12% after beating analyst earnings expectations and expressing optimism about a bounce-back from a disruptive fire at a major supplier.
Newmont (NEM) fell more than -6% after the company said that gold production in 2026 may be no higher than in 2025.
Deckers Outdoor (DECK) fell more than -15% after reporting disappointing 2026 net sales.
Earnings Reports(10/27/2025)
Keurig Dr Pepper Inc (KDP), Revvity Inc (RVTY), Arch Capital Group Ltd (ACGL), Whirlpool Corp (WHR), Simpson Manufacturing Co Inc (SSD), Alexandria Real Estate Equities (ARE), Brixmor Property Group Inc (BRX), Nucor Corp (NUE), NOV Inc (NOV), Hartford Insurance Group Inc/T (HIG), Brown & Brown Inc (BRO), Cincinnati Financial Corp (CINF), Crane Co (CR), F5 Inc (FFIV), Universal Health Services Inc (UHS), Amkor Technology Inc (AMKR), FTAI Aviation Ltd (FTAI), Principal Financial Group Inc (PFG), Kilroy Realty Corp (KRC), Welltower Inc (WELL), Avis Budget Group Inc (CAR), Cadence Design Systems Inc (CDNS), Confluent Inc (CFLT), Olin Corp (OLN), Waste Management Inc (WM), BioMarin Pharmaceutical Inc (BMRN), NXP Semiconductors NV (NXPI).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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