S&P 500 Hits Record 6,800 Amid Inflation Easing Optimism

The S&P 500 has reached new all-time highs, fueled by cooler-than-expected inflation data and strong corporate earnings, which have reinforced expectations of Federal Reserve interest rate cuts later this year. The September core CPI rose only 0.2% month-over-month and 3% annually, supporting the likelihood of at least two Fed rate reductions by year-end. Investors remain cautiously optimistic, balancing positive earnings reports and a potential US-China trade deal against concerns over elevated market volatility and weakening demand signals, such as distribution days in the S&P 500. Despite the ongoing government shutdown limiting economic data releases, corporate earnings have become the primary indicator of economic health, with companies showing resilience amid geopolitical and trade uncertainties. Meanwhile, investor appetite for equities is cooling among major funds, which have reduced stock exposure, possibly setting the stage for a more sustainable rally fueled by sidelined big-money buyers. Overall, the market sentiment is positive, but with a defensive stance advised due to risks around earnings surprises and external factors.