The S&P 500 Index ($SPX) (SPY) today is up +0.79%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.66%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.04%. December E-mini S&P futures (ESZ25) are up +0.68%, and December E-mini Nasdaq futures (NQZ25) are up +0.89%.
Stock indexes are trading higher after today’s slightly weaker-than-expected US CPI report arguably gave the Fed 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 +0.3% m/m and +3.1% y/y was slightly weaker than market expectations of +0.2% m/m and +3.1% y/y.
While the markets reacted favorably to today’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 today’s Oct S&P US manufacturing PMI report of +0.2 to 52.2, which was 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, today’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US President Reagan speaking out in a 1987 address in favor of free trade and against tariffs, calling tariffs an outdated idea that stifles innovation, drives up prices, and hurts US workers.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 because those courts said 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.
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%.
This week, 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 are mixed. The Euro Stoxx 50 is down -0.26%. 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) are up +2 ticks, and the 10-year T-note yield is down -1.2 bp at 3.989%. T-notes rebounded from early losses on the slightly weaker-than-expected US CPI report. Also, the 10-year breakeven inflation expectations rate today is down -2.4 bp at 2.279%.
T-notes have ongoing support due to 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 pricing in a 97% chance of a -25 bp rate cut at the next FOMC meeting on Oct 28-29.
European government bond yields are mixed. The 10-year German bund yield is up +3.5 bp at 2.618%. The 10-year UK gilt yield is down -0.4 bp at 4.420%.
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 today are all trading higher, except for a -1.5% decline in Tesla (TSLA). Notable gainers include a +2.4% gain in Alphabet (GOOG), and gains of more than 1% in Nvidia (NVDA) and Amazon (AMZN).
Crypto stocks are seeing support today with Bitcoin up +1.2% and Ethereum up +3.2%. Also, Coinbase (COIN) is up more than +5% on an upgrade from JPMorgan to overweight from neutral due to some risk abatement and increasing monetization opportunities. Riot Platforms (RIOT) is up more than +3%, and MARA Holdings (MARA) is up more than +2%.
Ford (F) is up more than +8% after beating analyst earnings expectations and expressing optimism about a bounce-back from a disruptive fire at a major supplier.
Newmont (NEM) is down more than -7% after the company said that gold production in 2026 may be no higher than 2025.
Deckers Outdoor (DECK) is down more than -13% after reporting disappointing 2026 net sales.
Earnings Reports(10/24/2025)
Booz Allen Hamilton Holding Co (BAH), First Hawaiian Inc (FHB), General Dynamics Corp (GD), Gentex Corp (GNTX), HCA Healthcare Inc (HCA), Illinois Tool Works Inc (ITW), Procter & Gamble Co/The (PG).
