Stocks rise after lower-than-expected CPI reading; The Dow Jones, S&P 500 and Nasdaq set new records

Lower-than-expected inflation keeps the Fed on track to cut interest rates in October

40 minutes ago

It would have taken a surprise spike in inflation in September to deter the Fed from cutting interest rates in October, but that didn’t happen.

The Consumer Price Index rose 3% over the year in September, the Bureau of Labor Statistics said Friday. While this was the highest annual inflation rate since January, it was below forecasters’ expectations of a 3.1% rise.

Moreover, for the Fed, “core” inflation, which excludes volatile food and energy prices, rose 3%, down from 3.1% in August and also below expectations. Fed policymakers watch “core” inflation measures closely because they can be better indicators of the path of prices. Food and energy prices can rise and fall dramatically for reasons unrelated to broad inflation trends.

The report reinforced expectations that the Federal Reserve will cut its benchmark interest rate next week when the Fed’s policy committee is scheduled to meet. Fed officials cut the federal funds rate by a quarter of a percentage point in September to boost the faltering labor market. The Federal Reserve has kept interest rates high to combat inflation, but concerns about prices have given way to concerns about slowing hiring in recent months.

Even before Friday’s report, the Fed was widely expected to go ahead with lowering interest rates. Fed officials had planned to cut interest rates twice at their remaining two meetings this year, as noted in their quarterly monetary policy forecasts last month.

Financial markets are pricing in near certainty that the Fed will cut the federal funds rate to a range of 3.5% to 3.75% by the end of the year, half a percentage point below its current level, according to CME Group’s FedWatch tool, which forecasts interest rate movements based on federal funds futures trading data.

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–Deacon lives

Social Security’s COLA Enhancement Revealed for 2026 – What Retirees Should Know

50 minutes ago

While Social Security beneficiaries will see larger paychecks next year, the annual cost of living adjustment for 2026 may not be enough to keep up with the rising expenses of older Americans.

The Social Security Administration announced Friday morning that the 2026 cost of living adjustment for benefits will be 2.8%. The adjustment, also known as COLA, is calculated each year based on third-quarter inflation. The increased benefits will be reflected in checks starting in January.

This year’s announcement was delayed after a government shutdown prevented the headline inflation report from being released on time.

The 2026 COLA is higher than the 2.5% adjustment for 2025; However, it may not be sufficient to keep up with the rising expenses of many retiree beneficiaries.

Social Security’s COLA is calculated using the Consumer Price Index for Urban Wage and Clerical Workers (CPI-W) for the third quarter of each year. This means that COLA uses inflation rates from July, August, and September.

However, because the formula uses historical data and is not predictive, experts say it does not accurately cover increases in expenses for Social Security beneficiaries. In addition, since the majority of beneficiaries are older Americans, some have argued that the Social Security Administration should use inflation reporting specifically for seniors’ expenses.

Read the full article here.

–Elizabeth Guevara

Inflation remained high in September

1 hour and 27 minutes ago

Inflation remained stubbornly high in September, maintaining continued pressure on the purchasing power of household budgets.

The Consumer Price Index rose 3.0% year over year in September, compared to a 2.9% annual increase in August, the Bureau of Labor Statistics said Friday. This was the highest inflation rate in 12 months since January. “Core” inflation, which excludes volatile food and energy prices, also rose 3.0% over the year, slightly lower than in August.

The report highlighted the staying power of the inflation surge that began as the economy reopened from pandemic lockdowns in 2021. Inflation peaked at a 40-year high in 2022 and began to decline after that, as the Federal Reserve raised interest rates to discourage borrowing.

Inflation generally declined after that, and nearly reached the Fed’s target of a 2% annual rate by early 2025. But the annual inflation rate has been rising every month since April, driven at least in part by President Donald Trump’s import taxes, which traders have largely passed on to consumers.

The CPI report was the only data published by the Bureau of Labor Statistics during the ongoing government shutdown, which began on October 1 and has no end in sight. The Bureau of Labor Statistics (BLS) has reinstated staff to produce the Consumer Price Index (CPI) report because it is critical for determining annual cost of living and Social Security benefit adjustments.

–Deacon lives

Procter & Gamble shares rise after better-than-expected results

2 hours and 25 minutes ago

Investors are responding positively to Procter & Gamble’s (PG) quarterly results and expectations of tariff reductions implemented this fiscal year.

Shares of the Cincinnati-based consumer goods giant rose about 2.5% before the bell after it reported first-quarter fiscal 2026 adjusted earnings of $1.99 per share on sales that increased 3% year over year to $22.39 billion. Analysts surveyed by Visible Alpha estimated it at $1.89 billion and $22.15 billion, respectively.

The company said it now expects “customs duty costs to rise by approximately $400 million after taxes for fiscal year 2026.” It had previously channeled “nearly $800 million after taxes, in costs above customs duties.”

Procter & Gamble shares entered Friday down about 9% this year.

Stock futures rise ahead of inflation data

3 hours and 9 minutes ago

Futures linked to the Dow Jones Industrial Average rose 0.1%.

Standard & Poor’s 500 futures rose 0.3%.

Nasdaq 100 futures rose 0.5%.