CPI: The latest inflation report shows prices rose at the fastest pace since January. Follow live updates

WE actions opened higher Friday morning after data showed annual inflation warmed up in September but less than expected, paving the way for the Federal Reserve to cut interest rates at its upcoming policy meetings.

The Dow Jones gained 236 points, or 0.5%. The broader S&P 500 index gained 0.65% and the tech-heavy Nasdaq Composite rose 0.86%. Wall Street’s fear index, the VIX, fell 4%.

Consumer prices rose 3% year over year in September, according to data from the Bureau of Labor Statistics. Economists expected an annual increase of 3.1%.

“With the Fed cutting rates — and this report does nothing to stop it from cutting them (by a quarter point) next week — and corporate profits continuing to rise, it’s hard to envision a break in this year’s bull market,” Chris Zaccarelli, chief investment officer at Northlight Asset Management, said in an email.

Treasury yields fell as investors snapped up bonds to lock in the current relatively high rates ahead of expected Fed rate cuts. The US dollar weakened slightly against other currencies.

“Tariff-related inflation will remain a near-term concern, but it is the jobs market that is becoming the most pressing issue for the Fed,” James Knightley, chief international economist at ING, said in a note.

Knightley said he expects the Fed to make quarter-point cuts in October and December, followed by additional rate cuts in early 2026.