United States (US) stock markets closed at fresh record highs on Friday as a cooler-than-expected inflation report reinforced expectations of multiple Federal Reserve (Fed) rate cuts before the year end. For the week, the Dow Jones soared 1016 points (2.20%), the Nasdaq 100 added 2.18% and the S&P 500 gained 1.92%.
Friday’s consumer price index (CPI) release showed headline inflation rose 3.0% year-on-year (YoY) in September (consensus was 3.1%) while core CPI also rose 3.0% YoY (consensus was 3.1%). The cooler inflation readings were followed by signs of resilience as the S&P Global composite purchasing managers’ index (PMI) rose to 54.8 in October from 53.9.
Focus shifts to Fed meeting and Q3 earnings
This comes ahead of Thursday morning’s Federal Open Market Committee (FOMC) meeting, where a 25 basis point (bp) rate cut from the Fed is fully priced in. With no summary of economic projections (SEP) or forecasts to dissect and Fed Chair Jay Powell expected to cite labour market weakness and reiterate data dependence, Thursday’s FOMC meeting is not expected to be a significant market mover.
That sets the scene for third quarter (Q3) 2025 earnings to take centre stage this week with approximately 44% of the S&P 500 by market capitalisation set to report, including hyperscalers Microsoft, Meta, Alphabet, Amazon and Apple. Investors will zero in on artificial intelligence (AI) capital expenditure (capex) revisions (+35% next twelve months), monetisation proof, tariff mitigation, 2025–2026 guidance, and return on investment (ROI) inflection.
US-China trade talks progress
Finally, US and Chinese trade negotiators are reported to have reached a preliminary consensus on a framework trade deal over the weekend during talks in Malaysia, pending final approval by Presidents Trump and Xi at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea later this week.
Key elements include a pause on punitive tariffs, increased Chinese purchases of US agricultural goods like soybeans, enhanced cooperation on curbing fentanyl precursor exports, eased Chinese restrictions on rare earth exports, and potential reciprocal adjustments to advanced semiconductor export controls.
Both sides described the discussions as ‘candid and productive’ with US Trade Representative Jamieson Greer noting a ‘path forward’ to balance trade deficits and secure supply chains, while China’s Li Chenggang emphasised restoring policy predictability.
Following their reopening US equity futures responded positively. S&P futures spiked to a fresh record high of 6890 before settling 0.62% higher at 6870 while Nasdaq futures surged 210 points (0.82%) to 25,721.