Background on Key Figures and Context
The United States’ stock markets closed on Friday at record-high levels, driven by a September inflation report that bolstered expectations for an upcoming interest rate cut by the Federal Reserve.
Key Market Indices Performance
- Dow Jones: Increased by 1.01% to reach 47,207.12 points.
- S&P 500: Advanced by 0.79% to 6,791.69 points.
- Nasdaq Composite: Gained 1.15% to reach 23,204.87 points.
All three major indices on Wall Street achieved new closing highs.
Weekly Performance
- Dow Jones: 2.20% increase
- S&P 500: 1.92% increase
- Nasdaq: 2.31% increase
Reasons for Market Optimism
Market optimism surged after the September inflation data confirmed it stayed below expectations amid uncertainty over a potential government shutdown.
- Consumer Price Index (CPI) rose 0.3% on a monthly basis, leading to an annual inflation rate of 3%, according to the Bureau of Labor Statistics.
Market expectations for the Federal Reserve to lower its benchmark interest rate in their upcoming meeting on October 29th and 30th strengthened, with a 97% probability of a 25 basis point cut and 92% for December, as per the CME FedWatch tool.
Last month, the probabilities were 91.9% and 73%, respectively.
Strong Corporate Earnings
Market enthusiasm was further supported by a robust start to the corporate earnings season. Approximately 30% of S&P 500 companies have already reported their quarterly results, with:
- 87% exceeding earnings expectations
- 82% surpassing revenue expectations
Mixed Performance in Mexican Markets
Meanwhile, the Mexican stock market halted two days of gains as investors continued to process local companies’ financial reports.
- S&P/BMV IPC: Declined by 0.60% to 61,145.49 points.
- FTSE-BIVA: Dropped by 0.73% to 1,217.95 units.
Both indices experienced a 1% weekly decline, marking their second-worst week in October.
Key Questions and Answers
- Q: What drove the US stock markets to record highs? A: The September inflation report, which stayed below expectations, bolstered market optimism and increased the likelihood of an upcoming interest rate cut by the Federal Reserve.
- Q: How did major market indices perform? A: The Dow Jones increased by 1.01%, S&P 500 advanced by 0.79%, and Nasdaq Composite gained 1.15%, all reaching new closing highs.
- Q: What is the current expectation for Federal Reserve interest rate cuts? A: Market expectations indicate a 97% probability of a 25 basis point cut in the upcoming meeting on October 29th and 30th, and a 92% probability for December.
- Q: How have corporate earnings contributed to market performance? A: Approximately 30% of S&P 500 companies have reported their quarterly results, with 87% exceeding earnings expectations and 82% surpassing revenue expectations.
- Q: How did the Mexican stock market perform? A: The S&P/BMV IPC declined by 0.60%, and the FTSE-BIVA dropped by 0.73% during the week, marking their second-worst week in October.
