Global markets took off with the Dow Jones Industrial Average topping 47,000 for the first time. This astounding jump came on the heels of a surprisingly low inflation report. Today’s Consumer Price Index (CPI) data for September just dropped. That’s a sign that annual inflation is still increasing, though not quite as fast as analysts expected. This announcement has created a new wave of hope among capital markets investors. It’s occurring just days before the next meeting between President Donald Trump and Chinese strongman Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea this month.
Perhaps that’s why the Dow, the S&P 500 and the Nasdaq Composite all rose to fresh record highs immediately after the release of the CPI data. The S&P 500 gained 0.79%, powered by a wide-ranging advance that featured strong gains among large cap tech stocks and booming consumer discretionary firms. Investors cheered the hot inflation data, which suggested that the Fed would be able to stay its accommodative monetary policy course.
Big industry players, such as Microsoft and Apple, will be releasing their corporate earnings over the course of next week. These reports are hugely influential and are sure to continue pushing market trends, especially in the tech sector.
Chris Zaccarelli, chief investment officer at Northlight Asset Management, commented on what this means for the market’s direction after the inflation data.
“With the Fed cutting rates — and this report does nothing to stop them from a [quarter-point] cut next week — and corporate profits continuing to increase, it’s hard to see an interruption of this year’s bull market.” – Chris Zaccarelli
Bob Doll, chief executive officer at Crossmark Global Investments, echoed similar sentiments, emphasizing the impact of corporate earnings on market stability.
“When the Fed is lowering rates and earnings are good, markets don’t go down very much. Earnings drive stocks, and earnings have been pretty good.” – Bob Doll
It is critical that Trump and Xi meet at the APEC summit to address key economic priorities. In particular, they’ll be addressing rising trade tensions and how we can work together for global economic recovery. Investors will be listening intently to get a sense of how this meeting will shape the future state of the markets and economy.