Wall Street Cheers Cooling Inflation as Dow Rises 150 Points

The Dow Jones Industrial Average closed higher on Friday, adding around 150 points as investors welcomed fresh signs that US inflation is continuing its gentle retreat. Despite the data being delayed due to the historic government shutdown, the September Personal Consumption Expenditures (PCE) report delivered exactly what markets wanted to hear: inflation pressures are easing, and the Federal Reserve appears on track for a third consecutive rate cut in December.

The Dow hovered near the 48,000 mark by the end of the session, capping off a steady, upbeat week for equities. The broader S&P 500 also climbed roughly 0.3%, inching closer to challenging its all-time high—another signal of renewed confidence across the market.

Cooling PCE Data Fuels Expectations of a “Threepeat” Rate Cut

Core PCE inflation softened to 2.8% year-on-year in September, while monthly inflation held at 0.2%. Although the figures arrived months late, traders didn’t mind: what matters is the clear indication that inflation is not re-accelerating. For investors who have been betting on Federal Reserve easing, this was another green light.

Supporting the optimistic tone, the University of Michigan’s latest Consumer Sentiment and Expectations surveys came in stronger than expected. Inflation expectations for both the one-year and five-year horizons ticked lower—another encouraging sign for policymakers aiming to restore confidence without triggering a slowdown.

Attention Turns to Next Week’s Pivotal Fed Meeting

With optimism running high, markets now shift their focus to the Federal Reserve’s rate decision scheduled for Wednesday. The meeting is expected to deliver the Fed’s third straight interest-rate cut, a move that traders consider almost fully priced in.

Alongside the decision, the Fed will publish an updated Summary of Economic Projections, including the closely watched “dot plot”—the roadmap that reveals policymakers’ expectations for future interest-rate paths. This update may prove just as influential as the cut itself, providing clues on how aggressively the Fed plans to ease in 2026.

A Strong Finish, but Momentum May Level Off

Despite Friday’s upbeat performance, analysts expect market momentum to pause slightly in the days leading up to the Fed announcement. With so much of the bullish sentiment tied to expectations of monetary easing, investors will likely tread carefully until the central bank confirms its next steps.

Still, the week ends on a strong note: equities are firm, inflation is calming, and traders are hopeful that the final month of the year will bring not just another rate cut—but perhaps a renewed wave of market confidence.