CPI and earnings results drive market to a new high

The stock market continued to rebound with another advance. The S&P 500 (+1.9%), Nasdaq Composite (+2.3%), and Dow Jones Industrial Average (+2.2%) all posted solid weekly gains, while the Russell 2000 (+2.5%) and S&P MidCap 400 (+2.3%) outperformed slightly, reflecting renewed appetite for cyclicals and smaller-cap exposure. 

A lower than expected CPI reading for the month of September helped push the market along as expectations for additional Fed rate cuts were bolstered. The CPI was published on Friday and it pushed the major indices to record intraday and closing highs. Earnings reports added to the positive sentiment, with several large-cap companies delivering better-than-expected results and guidance that reinforced confidence in corporate profitability heading into year-end. Trade related headlines did contribute to some midweek volatility after mixed signals from U.S. and Chinese officials regarding tariff policy, though markets ultimately looked past the uncertainty by week’s end.

Leadership was tilted toward growth-oriented and cyclical sectors. The technology sector (+2.8%) paced the advance, supported by another strong week for semiconductor names, with the PHLX Semiconductor Index climbing 2.9%. The Vanguard Mega Cap Growth ETF (+2.3%) moved in line with the Nasdaq Composite, underscoring the sustained leadership of the largest tech names even as participation broadened across the market. The energy sector (+2.4%) also outperformed alongside higher oil prices after Trump sanctioned several of Russia’s largest oil companies, while the industrials sector (+2.1%) joined in on earnings strength across its defense names. Defensive sectors lagged, with consumer staples (-0.6%) and materials (-0.2%) sectors finishing the week lower.