Wall Street Surges on Softer Inflation, Fed Rate Cut Hopes

U.S. stock markets surged to new record highs following the release of September's Consumer Price Index data, which showed inflation rising by 3.0% year-over-year, slightly below the 3.1% forecast, signaling cooling price pressures. The delayed report, released after a prolonged government shutdown, boosted investor confidence and fueled hopes for imminent Federal Reserve interest rate cuts, with traders pricing in a near certainty of a 25-basis-point cut at the upcoming Fed meeting and expectations of further reductions into early 2026. Tech and chip stocks led the rally, while energy and defensive sectors lagged. Despite the optimism, caution remains due to the ongoing government shutdown and geopolitical uncertainties. While the Fed's rate cuts lower the cost for banks and new loans immediately, many consumers may experience delayed relief on existing variable-rate debt. The inflation report also highlighted rising costs in food and fuel, and it is likely the last major economic data release until a federal budget deal is reached.