Lower-Than-Expected Inflation and Potential Trump-Xi Trade Deal Boost S&P 500

The S&P 500 (Index: SPX) clocked another record high for 2025, rising 1.9% over its previous week’s close to 6,791.69 at the end of trading on Friday, 24 October 2025.

With the fourth quarter’s earnings season under way, good earnings reports and optimism about the prospects for future earnings helped solidify stock prices early in the week. On Friday however, stock prices rose as investors absorbed two new pieces of information.

The first of those two new pieces of information was the shutdown-delayed release of the Consumer Price Index, which confirmed inflation during September 2025 had come in slightly lower than had been expected. That was significant because it clears the way for the Federal Reserve to continue cutting the Federal Funds Rate.

The CME Group’s FedWatch Tool forecasts the Fed’s next action will be to reduce this rate by a quarter point on Wednesday, 29 October (2025-Q4). Looking beyond that date, the FedWatch tool predicts the Fed will deliver another quarter point when it next meets to set rates on 10 December (2025-Q4).

The second new piece of information was the confirmation U.S. President Donald Trump would meet with China’s President Xi Jinping to potentially unveil a new trade deal between the two nations at the Association of South East Asian Nations (ASEAN) summit within the next several days, which added a speculative boost to the S&P 500 because it prompted investors to shift their time horizon from 2026-Q2 to 2025-Q4.

That shift can be seen in the latest update of the alternative futures chart, which visualizes the potential trajectories the S&P 500 may take depending upon how far into the future investors are focusing their forward-looking attention.

Next week could see more stock price movement related to news of trade deals made at the ASEAN summit. Until then, here are the market moving headlines that shaped investors’ future expectations during the trading week ending on 24 October 2025:

Monday, 20 October 2025

• Signs and portents for the U.S. economy:

• US-China trade war clouds global economic outlook as ‘new normal’ emerges

• Trump approves expanding credits for US auto production, issues new 25% truck duties
• China imports no US soybeans in September for first time in seven years

Oil prices slip on concerns over a supply glut

US regional banks’ earnings under scrutiny with jitters over credit risks

• Investor behind Zions, Western Alliance bad loans is tied to $270 million in troubled debt
• US bank rout prompts deal speculation as credit worries loom

US bets on Australian miners to break China’s grip on critical minerals supply

• US, Australia to invest $2 billion in critical minerals, advance Alcoa gallium project

Bigger trouble, stimulus developing in China:

• China’s economy slows as trade war, weak demand highlight structural risks

• Instant View: China Q3 GDP growth slows to 4.8% y/y, in line with forecast

Fall in China’s exports of rare earth magnets stokes supply chain fears

China’s new home prices fall at fastest pace in 11 months

BOJ minions trying to be mysterious about what they’re going to do for some reason:

• Bank of Japan’s Ueda keeps cards close to chest ahead of October meeting
• Hawkish BOJ board member keeps up calls for more rate hikes
• BOJ may slightly revise up this year’s growth forecast, sources say

Wall Street ended higher ahead of a busy earnings week and inflation data

• Wall St ends sharply higher as earnings optimism fuels risk appetite
• Why stocks and gold are rallying together like it’s 1999 and 1979 simultaneously

Tuesday, 21 October 2025

• Signs and portents for the U.S. economy:

• Oil settles higher as investors focus on supply signals

• US seeks 1 million barrels of oil for Strategic Petroleum Reserve

Fed minions expected to deliver two more rate cuts before end of 2025:

• US Fed to trim rates twice more this year; 2026 rate path very unclear
• Waller says Fed staff studying streamlined ‘payment accounts’

Bigger trouble, stimulus developing in China:

• Foreign Investors Trapped in China’s Real Estate Meltdown as $140 Billion Bet Unravels Further
• China’s consumer subsidy scheme needs a rethink

BOJ minions get new big boss who wants to see wage-price inflation:

• Japan’s Takaichi calls on BOJ to pursue inflation driven by wage gains
• Japan’s next finance minister could unsettle yen bears

ECB minions worrying about US dollar:

• ECB’s Lane flags dollar risk for banks amid tariff turmoil

Wall Street closed mixed as traders digested a wave of earnings data

• Wall Street ends mixed as earnings lift the Dow
• Gold retreats after record rally, on track for biggest daily drop since 2020

Wednesday, 22 October 2025

• Signs and portents for the U.S. economy:

• Oil rises about 2% on higher US demand, trade talk optimism
• Exclusive: US considering curbs on exports to China made with US software, sources say
• India nears deal to slash US tariffs on Indian imports to 15%-16%, Mint reports

Fed minions thinking big banks may not need to stash so much capital:

• US Fed floats plan with smaller capital hikes for big banks, Bloomberg News reports
• US banks’ surge in loans to private creditors may pose risks, Moody’s says

BOJ minions expected to hike Japan’s interest rates as Japan’s export economy shows recovery signs:

• BOJ poised to hike interest rates in Q4, majority of economists say
• Japan’s exports snap four-month slump as weak yen offsets US tariff hit

ECB minions / Bigger trouble developing in Eurozone:

• China overtakes US as Germany’s top trading partner

• Airbus opens second jet assembly line in China as it targets production growth

Nasdaq slumps more than 1% as Netflix’s plunge drags Wall Street lower

• Netflix’s blockbuster run loses spark amid valuation jitters

• A $619 Million Surprise Hit Netflix’s Margins

Wall Street ends lower on mixed earnings, revived US-China trade tensions

Thursday, 23 October 2025

• Signs and portents for the U.S. economy:

• Oil surges as Russia sanctions roil market, but western enforcement is key

• Exclusive: China state oil majors suspend Russian oil buys due to sanctions
• Russia, at war, faces double trouble: Trump ultimatum and a hit to oil sales to India

China, U.S. to hold trade talks in Malaysia as truce deadline nears

US existing home sales hit 7-month high; affordability remains a challenge

Fed minions working on a new scheme for setting U.S. interest rates:

• Dallas Fed chief’s rate target reform welcomed amid very uncertain timetable

Bigger stimulus developing in China:

• China’s new five-year plan sharpens industry, tech focus as US tensions mount

BOJ minions get mixed economic data to cloud their plan to hike Japan’s interest rates:

• Japan’s core inflation accelerates in September, stays above BOJ target
• Japan’s factory activity hits 19-month-low in October, PMI shows

Wall Street ended higher as Trump–Xi meeting was confirmed

• Wall St ends higher amid mixed earnings, Trump-Xi meeting confirmed

Friday, 24 October 2025

• Signs and portents for the U.S. economy:

• US consumer inflation cools in September; shutdown threatens next report

• VIEW US consumer prices increase less than expected in September

Oil climbs for second day on supply fears due to US sanctions on Russian companies

Fed minions expected to deliver rate cut next week, thinking about undoing excessive regulation on banks:

• ‘Cooler’ Than Expected CPI Data Leaves Fed On Track For Rate-Cuts

• Fed seen headed for more rate cuts as inflation undershoots expectations

Fed to hand banks a win with proposed ‘stress test’ overhaul

Bigger trouble, stimulus developing in China:

• US launches investigation into China’s compliance with 2020 trade deal

Growth signs developing in Eurozone:

• Euro zone business activity growth accelerates as demand jumps, PMI shows

Wall Street notches record close after soft CPI data, posts best week since early August

• Wall Street notches record closing highs on cool inflation, solid earnings

The Atlanta Fed’s GDPNow tool projection of real GDP growth in the U.S. during the recently ended 2025-Q3 remained unchanged at +3.8% with data reports on hold because of the Senate Democrats’ ongoing refusal to fund government operations. The BEA’s official estimates of GDP will be on hold as well.

Image credit: Microsoft Copilot Designer. Prompt: “An editorial cartoon of a Wall Street bull who is happy with a lower-than-expected inflation report and upcoming trade talks between U.S. President Trump and China’s Chairman Xi”, followed by a second prompt: “Add another speech bubble that says “No wonder the S&P 500 set a new record high!”