Stocks Rise Before CPI as Spike in Oil Sinks Bonds: Markets Wrap
(Bloomberg) — A rally in big tech drove stocks higher as trade tensions cooled ahead of a reading on consumer prices, with equity investors shrugging off concerns about any potential impacts of an oil spike on inflation. Bonds fell.
The S&P 500 approached its all-time highs as the White House said President Donald Trump will meet his Chinese counterpart Xi Jinping on Oct. 30. Tesla Inc. erased its post-earnings slide to lead gains in megacaps. Energy shares joined a surge in crude as the US announced sanctions on Russia’s biggest oil companies in a bid to end the war in Ukraine.
The equity bounce came amid hopes the world’s two largest economies will de-escalate a trade war. Meantime, the Trump administration is weighing a quantum-computing boost in an effort to counter China – spurring an industry rally.
While volatility has picked up, drawdowns have been largely contained as retail investors see them as opportunities to add risk amid the strength of Corporate America.
“Valuations continue to be the best argument for bears, but the relentless buy-the-dip approach of investors has even the most pessimistic investors questioning their outlook,” said Mark Hackett at Nationwide.
Not even a jump in crude oil was able to dissuade Wall Street from its buying impulse. As money markets brace for a Federal Reserve rate cut next week, investors will likely look past any evidence of stubborn inflation in Friday’s consumer price index report.
The S&P 500 closed near 6,740. The Nasdaq 100 rose almost 1%. Tesla rallied over 2%. In late hours, Intel Corp. gave an upbeat outlook. Ford Motor Co. sees a profit hit of as much as $2 billion from a fire at a key supplier.
West Texas Intermediate crude soared about 5.5%. US 10-year yields climbed six basis points to 4%. Gold halted its slide. The dollar wavered. Binance’s token surged as exchange co-founder Changpeng Zhao received a pardon from Trump.
“As with the trade war, the fallout from the oil sanctions is murky at best, although we expect that from the perspective of the market at least, the kneejerk spike in crude will represent the bulk of the attention devoted to this matter, as it were,” said Ian Lyngen, Vail Hartman and Delaney Choi at BMO Capital Markets.
After being delayed by the US government shutdown, the Bureau of Labor Statistics will release the September CPI on Friday. The data, originally slated for Oct. 15, will give Fed officials a critical piece of information on inflation ahead of their policy meeting.
Economists in a Bloomberg survey forecast the core CPI, which excludes food and fuel for a better snapshot of underlying inflation, to have climbed 0.3% for a third straight month as higher import duties continue to gradually filter through to consumers. The projected monthly gain will keep the annual core CPI at 3.1%.
Although inflation is stuck above the Fed’s goal, officials are expected to announce their second rate cut of the year because of the fragile labor market.
Friday’s CPI is important in the sense that it’s one of the few economic data points that we will see given the government shutdown, according to Emily Bowersock Hill founding partner of Bowersock Capital Partners.
“But since the Federal Reserve is likely more focused on the labor market, we don’t expect Friday’s CPI to weigh heavily on next week’s Fed decision,” she said. “We will likely see two more rate cuts this year, in October and December.”
US PREVIEW: CPI to Greenlight Fed Rate Cut in October
JPMorgan Chase & Co.’s trading desk sees a roughly 65% chance the S&P 500 will advance following the release despite economists expecting an elevated print. The team including Andrew Tyler laid out scenarios for stocks on CPI day that are “less volatile than usual,” with investors’ expectations that the Fed will ease again likely offsetting any inflation-related angst.
“We agree with the market’s view and think it would take the largest of tail-risks to push the Fed to the sideline,” Tyler wrote in a note to clients.
With forecasts originally anticipating a rise in headline CPI inflation to around 3.5% by year-end, the inflation passthrough has so far been more muted than anticipated, likely due to a combination of margin compression, inventory frontloading, and trade diversion, according to Seema Shah at Principal Asset Management.
“While these factors have helped cushion the initial impact, they are inherently temporary. As inventories deplete, trade routes narrow, and margins continue to shrink, firms may be forced to pass on higher costs to consumers,” she said. “As such, upside risks remain. If pricing pressures spill over into services, it could signal a broader and more persistent inflationary trend.”
Her firm’s estimates suggest that tariffs will deliver a one-off, modest inflation shock, keeping core CPI near current levels before easing slightly in late 2026. However, the risk of a more sustained inflationary episode cannot be ruled out, which may prompt the Fed to adopt a more cautious approach to easing, she noted.
A survey conducted by 22V Research shows that 45% of investors believe the market reaction to CPI will be “risk-on,” 26% said “risk-off” and 29% “mixed/negligible.”
This is the first month since July that bets on a positive reaction was favored. The tally also showed that 61% of investors think core CPI is on a “Fed friendly” glide path. This value has increased from last month.
Prospects for Fed easing, durable earnings growth and AI investment spending support the view that the equity bull market has further room to run, according to Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.
While it’s important to have adequate exposure to US stocks, she also believes investors should diversify their portfolios.
“Any setbacks in US-China relations or potential concerns about the durability of the AI-driven rally could trigger bouts of volatility,” she noted.
Corporate Highlights:
Super Micro Computer Inc., which emerged as a favorite stock among artificial intelligence-obsessed investors last year, unexpectedly issued first-quarter guidance that fell far short of Wall Street’s expectations. Microsoft Corp. is asking its Xbox gaming division to produce profit margins that are well above the industry average, ratcheting up pressure on its video-game makers during a difficult time for the field at large. Palantir Technologies Inc. will provide AI software to Lumen Technologies Inc. in a new partnership, part of a push by the telecom company to support more AI services, and a bid by Palantir to reach more customers. American Airlines Group Inc. reported a smaller-than-expected loss in the third quarter, and the carrier joined rivals in predicting a strong end to the year as corporate and premium leisure travel remain the industry’s growth drivers. Southwest Airlines Co. said the US government shutdown is starting to ripple across domestic flying, threatening the record sales it expects during the crucial holiday period. T-Mobile US Inc. posted better-than-expected subscriber growth in the third quarter, but the shares fell as investors focused on the increasing competition for new customers among the top wireless companies. Union Pacific Corp.’s quarterly profit slightly outpaced Wall Street estimates, a sign of resilience for rail volume in the face of tariffs and economic volatility. Honeywell International Inc. raised its full-year profit outlook and reported third-quarter earnings that topped Wall Street expectations, boosted by the company’s aerospace unit ahead of a planned breakup. Rivian Automotive Inc. is cutting more than 600 jobs, or about 4.5% of its workforce, as the company contends with an unsteady market for electric vehicles in the US. Moderna Inc. said its vaccine to prevent cytomegalovirus, a common cause of birth defects, failed to meet its goal in a late-stage trial, a setback for the company still struggling to move past the pandemic. Molina Healthcare Inc. reported a steep quarterly earnings miss and cut its guidance for the third time in recent months, warning profit won’t grow next year as medical costs climb. O’Reilly Automotive Inc.’s executives detailed the company’s exposure to a bankrupt supplier and said inflation is taking a toll on sales to do-it-yourself customers. Las Vegas Sands Corp. reported adjusted earnings per share for the third quarter that beat the average analyst estimate. Blackstone Inc. has amassed $508 billion of assets in credit as the private capital giant targets higher-grade debt investing. Tractor Supply Co.’s net sales for the third quarter increased 7.2%, boosted by higher comparable-store sales, new store openings, and the contribution from Allivet, acquired back in December. Cargill Inc. is turning to artificial intelligence to ensure it gets more beef from its processing plants as the US cattle herd dwindles to the lowest level in seven decades. Rogers Communications Inc. beat analysts’ estimates in the third quarter, lifted by growth in wireless and media after the company completed a major sports deal and as the Toronto Blue Jays baseball team that it owns made a run to the playoffs. How should regulators react to the blurring line between investing and gambling? Let us know in the latest Markets Pulse survey.
Some of the main moves in markets:
Stocks
The S&P 500 rose 0.6% as of 4 p.m. New York time The Nasdaq 100 rose 0.9% The Dow Jones Industrial Average rose 0.3% The MSCI World Index rose 0.5% Bloomberg Magnificent 7 Total Return Index rose 0.9% The Russell 2000 Index rose 1.3% Tesla rose 2.3% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1615 The British pound fell 0.3% to $1.3322 The Japanese yen fell 0.4% to 152.60 per dollar Cryptocurrencies
Bitcoin rose 2.3% to $110,123.39 Ether rose 1.9% to $3,852.95 Bonds
The yield on 10-year Treasuries advanced six basis points to 4.00% Germany’s 10-year yield advanced two basis points to 2.58% Britain’s 10-year yield was little changed at 4.42% The yield on 2-year Treasuries advanced five basis points to 3.49% The yield on 30-year Treasuries advanced five basis points to 4.58% Commodities
West Texas Intermediate crude rose 5.4% to $61.64 a barrel Spot gold rose 0.5% to $4,118.33 an ounce ©2025 Bloomberg L.P.
