CNBC Daily Open: Cooler-than-expected U.S. consumer inflation adds to market cheer

A tamer-than-expected U.S. inflation report for September injected optimism into markets. Traders are now betting that the Federal Reserve will almost certainly cut rates at its October meeting — scheduled for later this week — as well as at its December gathering.

Major U.S. indexes climbed Friday and had their second consecutive week in the green, with the S&P 500, Nasdaq Composite and the Dow Jones Industrial Average all up about 2% for the week.

The inflation report offers additional support to markets already buoyed by a strong earnings season. Of the companies that have reported so far, 87% managed to exceed Wall Street's expectations, much higher than the typical 67% beat rate, according to LSEG. If Big Tech earnings this week top estimates — and provide upbeat guidance — markets could see fresh highs.

U.S. President Donald Trump's tariffs, however, are still a chilly overhang amid the warm sentiment. Trump on Saturday hit Canada with an additional 10% tariff, as punishment over an ad.

Economists have been warning that tariffs will lead to higher prices. Indeed, while the consumer price index report came in below estimates, September's headline annual rate rose to 3% from the previous month's 2.9%.

"Inflation might not be slowing but it's not surprising to the upside anymore," said David Russell, global head of market strategy at TradeStation.

With the lack of other data, such as the jobs report, because of the U.S. government shutdown, we don't have the full picture of how the economy is performing — so the rise in markets could be balanced on a precarious ledge.

Trump hits Canada with an extra 10% tariff. This brings general duties on Canada to 45%. Ontario said it would stop its ad featuring Ronald Regan criticizing tariffs — which incensed Trump — after the first two games of the World Series.

Trade developments at the ASEAN Summit. Top U.S. and China officials met Sunday, resulting in "a very successful framework" for talks between Trump and Xi, according to U.S. Treasury Scott Bessent. Trump announced agreements with four Southeast Asian countries.

U.S. inflation rose less than expected. The consumer price index for September came in at 0.3% for the month, putting the annual rate at 3%. Both figures were 0.1 percentage points lower than the 0.4% and 3.1%, respectively, expected by a Dow Jones survey of economists.

Stocks rise on CPI report. Major indexes climbed Friday, with the Dow Jones Industrial Average closing above 47,000 for the first time. The pan-European Stoxx 600 added 0.23%, reversing earlier losses. U.S. stock futures rose Sunday evening stateside.

[PRO] Packed week of earnings and meetings ahead. This week, five of the Magnificent Seven group of stocks — all but Tesla and Nvidia — will be reporting their financial results, the U.S. Federal Reserve will convene and the Trump-Xi meeting could finally happen.

Trump to meet China's Xi for the first time in second term as trade deal remains elusive

White House press secretary Karoline Leavitt told reporters last week that Trump will meet his Chinese counterpart Xi Jinping on Oct. 30 on the sidelines of the Asia-Pacific Economic Cooperation, or APEC, Summit.

It will be the first in-person meeting between the two heads of states since Trump returned to the office in January. The high-stakes meeting comes as a delicate trade detente between the economic superpowers nears its expiration on Nov. 10 if they fail to agree on another extension.

— Anniek Bao