Dow Hits All-Time High as Inflation Cools
- The Dow Jones Industrial Average reached a record high of 42,628.32 points on Friday, driven by a positive inflation report.
- Consumer spending showed moderate growth, and consumer sentiment exceeded expectations, leading to increased investor optimism.
- The market is now anticipating a higher likelihood of a 50 basis point rate cut at the Federal Reserve's next meeting.
On Friday, the Dow Jones Industrial Average reached a record high of 42,628.32 points, driven by a positive inflation report that eased concerns about rising prices. This report allowed the Federal Reserve to focus on improving the labor market while continuing to lower interest rates. The S&P 500 and Nasdaq, however, experienced slight declines, indicating mixed reactions among investors. The Russell 2000 index, which tracks small-cap stocks, rose 0.7%, reflecting optimism in a low-rate environment. The Commerce Department's report showed a moderate increase in consumer spending, while inflation pressures continued to diminish. Consumer sentiment also exceeded expectations, with the University of Michigan reporting a final September reading of 70.1. This positive sentiment has led investors to anticipate a higher likelihood of a 50 basis point rate cut at the Fed's upcoming meeting. The Federal Reserve's recent decision to cut rates by 50 basis points was influenced by these cooling price pressures, which could help mitigate risks to employment. Market analysts believe that the current economic conditions are pricing in a soft landing, suggesting that inflation has been effectively managed. In individual stock movements, Bristol-Myers Squibb saw a rise after FDA approval of its schizophrenia drug, while Costco Wholesale faced a decline due to disappointing revenue. Additionally, US-listed shares of Chinese companies gained after China's central bank lowered interest rates, indicating a broader global market response to monetary policy changes.