US market opened higher on Friday following a softer-than-expected inflation report, which increased expectations for a Federal Reserve rate cut next week.
In early trading, the Dow Jones Industrial Average climbed 385.50 points, or 0.82%, to 47,115.06. The S&P 500 rose 53.03 points, or 0.81%, to 6,792.15, while the Nasdaq Composite gained 226.99 points, or 0.98%, to 23,166.88.
Despite the government shutdown, the US Bureau of Labor Statistics released the September 2025 Consumer Price Index (CPI) ahead of schedule, before the data collection was affected.
The report, originally set for October 15, shows the CPI for All Urban Consumers (CPI-U) rose 0.3% in September, down from 0.4% in August.
Over the past 12 months, the all-items index increased 3.0%, up from 2.9% in August. The all-items less food and energy index (core CPI) also rose 3.0% year-over-year. Energy prices climbed 2.8% over the year, while food prices increased 3.1%.
Monthly increases in September were driven by higher costs for shelter, airline fares, recreation, household furnishings, and apparel.
In contrast, motor vehicle insurance, used cars and trucks, and communication costs declined. Gasoline rose 4.1%, contributing most to the monthly increase.
Core monthly inflation slowed to 0.2% in September, down from 0.3% in August and July, slightly below the 0.3% expected. The annual inflation rate hit 3.0% in September, the highest since January, slightly below forecasts of 3.1%.
Fed likely to cut rates
The Federal Open Market Committee (FOMC) meets on October 28–29, with a 25-basis-point rate cut expected with Chair Jerome Powell facing pressure from President Donald Trump to lower borrowing costs to boost the economy.
“There was little in today’s benign CPI report to ‘spook’ the Fed and we continue to expect further easing at next week’s Fed meeting,” Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management, said in an emailed statement to Politico.
“A December rate cut also remains likely with the current data drought providing the Fed with little reason to deviate from the path set out” in policymakers’ September projections, she added.
The CPI report provides a small reprieve for the Fed, which has been deprived of key economic data while much of the government is shut down.
Bureau of Labor Statistics staff were brought back to release this report so the Trump administration could meet the statutory deadline for inflation-related Social Security adjustments.
However, the agency is not yet collecting data for the next CPI, leaving the October report delayed indefinitely. The monthly jobs report is also on hold.
The Fed still has recent data and some private-sector supplements to guide it, but Powell said last week that the longer the data blackout continues, the more challenging it will be for policymakers.
Fed policymakers will decide next Wednesday whether to cut interest rates again, with Chair Jerome Powell facing pressure from President Donald Trump to lower borrowing costs to boost the economy.
“There was little in today’s benign CPI report to ‘spook’ the Fed and we continue to expect further easing at next week’s Fed meeting,” Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management, said in an emailed statement to Politico.
“A December rate cut also remains likely with the current data drought providing the Fed with little reason to deviate from the path set out” in policymakers’ September projections, she added.
Bureau of Labor Statistics staff were brought back to release this report so the Trump administration could meet the statutory deadline for inflation-related Social Security adjustments.
However, the agency is not yet collecting data for the next CPI, leaving the October report delayed indefinitely. The monthly jobs report is also on hold.
The Fed still has recent data and some private-sector supplements to guide it, but Powell said last week that the longer the data blackout continues, the more challenging it will be for policymakers.