Wall Street Sets New Records as Quantum Stocks and Cooling Inflation Steal the Show

Sometimes the market doesn’t need much to celebrate, a slightly cooler inflation number and a touch of quantum magic were apparently enough.

Inflation Cooldown Fuels Optimism

Friday’s session closed with fireworks: the Dow Jones gained 1%, the Nasdaq jumped 1.2%, and the S&P 500 pushed within a whisper of the 6,800 mark, all record highs.

The trigger? September inflation came in at 3.0%, just below the expected 3.1%, rekindling investor confidence that the Federal Reserve will indeed cut rates by 25 basis points next Wednesday. According to the CME FedWatch tool, the probability of that happening sits above 95%, with another cut in December looking almost certain.

This softer inflation data strengthens the “Goldilocks” narrative, an economy that’s slowing just enough to please the Fed without suffocating growth.

Tech Takes the Lead

Big Tech did the heavy lifting again.

Amazon (AMZN | +1.41%), Apple (AAPL | +1.25%), and especially Alphabet (GOOGL | +2.67%) drew strong bids ahead of next week’s earnings.

Alphabet got an extra push after AI startup Anthropic announced a multi-billion-dollar deal to use Google Cloud chips to train its Claude model, a clear win for Google in the AI arms race.

IBM’s Quantum Rebound

And then there was IBM (IBM | +7.88%).

After initially disappointing investors with its quarterly numbers, Big Blue rocketed higher when IBM Research Director Jay Gambetta told Reuters that the company’s quantum algorithm can already run on existing AMD (AMD | +7.63%) chips. That’s a serious step toward making quantum computing more commercially viable, potentially solving problems that even the fastest supercomputers choke on, from drug discovery to advanced battery design.

As CNBC’s Jim Cramer quipped, “If you want exposure to quantum tech, go with IBM, not those money-losing startups begging for government funding.”

Sector Highlights: Winners and Losers

Ford (F | +12.16%) doubled Wall Street’s profit expectations thanks to robust vehicle sales and lower import costs, proof that old-school automakers can still deliver surprises.

Comfort Systems USA (FIX | +18.99%) jumped after beating earnings, while Nextracker (NXT | +8.74%) impressed with both profit and revenue and even raised its full-year forecast.

On the losing end, Deckers Outdoor (DECK | -15.21%) - maker of Hoka sneakers and Uggs boots - stumbled despite solid results, as its outlook failed to wow.

Booz Allen Hamilton (BAH | -8.86%) dropped after cutting its guidance, and Newmont (NEM | -6,23%) sank as investors balked at its warning that 2026 gold output could fall despite better-than-expected Q3 results.

Commodities and Currencies

Gold remained firmly out of favor, slipping another 0.6% to $4,103 per ounce, while oil steadied after a 7.6% weekly gain, supported by fresh U.S. sanctions on Russian producers. The 10-year Treasury yield ticked up slightly to 3.99%, and the euro/dollar hovered around 1.1630.

Geopolitical Undercurrent

Markets briefly cheered confirmation that Donald Trump and Xi Jinping will meet next week, though Trump quickly soured the mood by halting trade talks with Canada over import tariff disputes. Still, the geopolitical noise couldn’t dampen the broader euphoria heading into the weekend.

Bottom Line:

It’s rare to see such harmony across markets, inflation easing, yields stabilizing, and tech stocks soaring. With the Fed likely to deliver another rate cut and quantum computing suddenly cool again, it’s no wonder Wall Street is humming.

If the market had a soundtrack right now, I’d pick “Don’t Stop Me Now” by Queen, because that’s exactly how traders seem to feel heading into next week.

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Kristoff - ChartMill

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