Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
U.S. stock index futures advanced in premarket trading Friday following a cooler-than-expected inflation report, while footwear and apparel maker Deckers Outdoor saw its shares plunge after issuing a disappointing full-year sales outlook. The market’s positive reaction to the inflation data occurred as investors also monitored ongoing international trade discussions involving the United States, China, and Canada.
Inflation Data Fuels Market Optimism
The Labor Department reported early Friday that the Consumer Price Index (CPI) increased by 0.3% in September, bringing its annual rise to 3%. The core CPI, which excludes volatile food and energy prices, climbed 0.2% for the month, resulting in a 3% year-over-year increase. These figures were marginally below economists’ predictions, who had anticipated a 0.4% monthly CPI increase and a 3.1% annual rise, alongside a 0.3% monthly core CPI increase and a 3.1% annual gain.
In response to the inflation data, futures for the Dow Jones Industrial Average rose 0.2%, S&P 500 futures gained 0.3%, and Nasdaq 100 index futures were up 0.5% in premarket trading. The 10-year Treasury yield also dropped to 3.97%, while West Texas Intermediate crude futures added to previous gains, trading around $62.10 a barrel. Among exchange-traded funds, the Invesco QQQ Trust (QQQ) was up 1%, and the SPDR S&P 500 ETF (SPY) moved up 0.7%.
Earnings Reports Drive Individual Stock Movement
Deckers Outdoor Plunges on Sales Outlook
Deckers Outdoor (DECK) shares fell more than 11% in premarket trading Friday. The decline followed the company’s report of better-than-expected earnings and sales for its fiscal second quarter, with earnings rising 14% to $1.82 per share and revenue growing 9% to $1.43 billion. However, a disappointing full-year sales outlook, attributed to an increasingly cautious consumer environment, weighed heavily on the stock.
Other Notable Earnings Reactions
Conversely, several other companies saw significant premarket gains after reporting earnings. Comfort Systems (FIX) soared over 18%, Ford Motor (F) jumped nearly 4%, and General Dynamics (GD) shares rallied more than 3%. Intel (INTC) surged nearly 7%, Nextracker (NXT) leapt nearly 14%, and Procter & Gamble (PG) shares gained over 4%.
International Trade Discussions
U.S.-China Trade Talks
Treasury Secretary Scott Bessent and other U.S. officials are scheduled to commence trade talks with top Chinese officials in Malaysia on Friday. Investors are closely watching these developments, particularly with President Trump expected to meet with Chinese President Xi Jinping at the APEC summit in South Korea later this month. Hopes are high for a potential deal or at least a cease-fire to avert a looming 100% China tariff set to take effect on November 1.
U.S.-Canada Trade Talks Halted
Separately, President Trump announced on Truth Social that he has halted trade talks with Canada. He cited an anti-tariff advertisement featuring the late President Ronald Reagan, which was reportedly running in the Canadian province of Ontario, as the reason for his decision.
Market Outlook
The unexpected moderation in core inflation provides a favorable backdrop for equity markets, contributing to an optimistic start to trading. However, investor sentiment remains sensitive to corporate earnings performance and the evolving landscape of international trade relations, particularly concerning tariffs and diplomatic engagements.
