Wall Street Rebounds as Inflation Data Matches Forecasts/ Newslooks/ WASHINTON/ J. Mansour/ Morning Edition/ Wall Street saw modest gains Friday after a three-day slide, as inflation data aligned with economist expectations. The S&P 500 and Dow both climbed, while the Nasdaq dipped slightly. Investor optimism was boosted by hope for more Federal Reserve rate cuts.
Wall Street Market Trends Quick Looks
- S&P 500 rose 0.2% after three consecutive declines
- Dow Jones added 206 points (0.4%) by mid-morning
- Nasdaq slipped slightly by 0.1%
- Inflation rose to 2.7%, matching economist expectations
- Hopes grow for more Federal Reserve interest rate cuts
- Trump’s new tariffs on imports introduced market uncertainty
- Paccar, Eli Lilly, Pfizer showed stock gains
- Costco stock fell 3% despite strong earnings
- European markets rose while Asian markets declined
- Consumer sentiment weakened, except for major stockholders
Deep Look: Wall Street Rebounds as Inflation Data Meets Forecasts
NEW YORK — September 26, 2025
U.S. stock markets opened higher Friday, breaking a three-day losing streak, after a closely watched inflation report came in as expected — a sign that economic conditions may be stabilizing, offering room for future interest rate cuts from the Federal Reserve.
The S&P 500 edged up 0.2%, setting the index on track to close in the green for the first time in four days. The Dow Jones Industrial Average gained 206 points (0.4%), while the Nasdaq composite slipped slightly by 0.1%. All three indices remain near record highs reached earlier this week.
Inflation In Line with Forecasts
A core inflation metric favored by the Federal Reserve showed consumer prices rising 2.7% in August, up from 2.6% in July. Though this is still above the Fed’s 2% inflation target, the reading was exactly in line with economists’ forecasts, helping ease market anxiety about runaway inflation.
The match between expectations and data reinforced investor hopes that the Fed might continue to lower interest rates. Wall Street has rallied sharply since April on the anticipation of a series of rate cuts — a critical driver behind the market’s recent highs.
The Fed enacted its first rate cut of the year last week, with projections for more through 2026. Still, Fed Chair Jerome Powell emphasized that the central bank remains cautious, citing the risk that premature cuts could reignite inflation pressures.
Trump’s Tariff Announcement Introduces Market Jitters
Late Thursday, President Donald Trump announced a fresh round of import tariffs, effective October 1. Products impacted include pharmaceuticals, home cabinetry, upholstered furniture, and heavy trucks.
Details remain vague, as the announcement came via Trump’s personal social media account, leaving analysts unclear on the economic ramifications. However, the market reaction was relatively muted, reflecting uncertainty more than panic.
Companies in the impacted sectors experienced mixed reactions:
- Paccar, the maker of Peterbilt and Kenworth trucks, surged 4.3%.
- Pharmaceutical giants Eli Lilly and Pfizer posted modest gains of 0.7% and 0.3%, respectively.
- Home goods retailers like Williams-Sonoma and RH saw volatile swings, ultimately closing lower.
Costco’s Decline Despite Positive Earnings
Costco Wholesale fell 3% after reporting better-than-expected quarterly earnings. Despite outperforming analyst profit forecasts, concerns over slower membership renewal rates and weaker-than-expected same-store sales growth pulled the stock down.
Global Markets Reflect Mixed Sentiment
European indices saw gains Friday:
- France’s CAC 40 rose 0.9%, signaling positive sentiment following recent global market weakness.
In contrast, Asian markets were mostly down:
- South Korea’s Kospi dropped 2.5%
- Japan’s Nikkei 225 fell 0.9%, dragged by steep losses from pharmaceutical firms Sumitomo Pharma (-3.5%) and Chugai Pharmaceutical (-4.8%).
Bond Market and Consumer Sentiment Update
The 10-year Treasury yield remained steady at 4.18%, showing little movement in response to inflation data or tariffs.
Meanwhile, a University of Michigan consumer sentiment report revealed that overall sentiment weakened more than expected, largely due to persistent dissatisfaction with high prices. However, expectations for inflation in the next 12 months ticked down slightly from 4.8% to 4.7%.
Interestingly, sentiment remained stable among Americans with significant stock investments, suggesting the recent market highs have helped cushion inflation concerns for wealthier investors.
Final Takeaway
While uncertainty around trade policy and inflation persists, Friday’s market performance indicates growing optimism that the Fed can manage inflation without derailing growth. The alignment of inflation data with expectations was key in calming markets and could pave the way for additional rate cuts that Wall Street has been counting on.
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