S&P 500 is up on cooling inflation and strong earnings

On Monday morning, the S&P 500 index (SPX) hit a new all-time high at $6,847. Lower-than-expected inflation data for September has been the main driver behind recent gains, thus strengthening investor confidence that the Federal Reserve (Fed) is about to start its easing cycle at the upcoming October 28–29 meeting. 

On the cost of living front, consumer prices increased by 0.3% month-on-month and 3.0% year-on-year. This modest cooling has alleviated concerns about persistently high inflation, giving the regulator room to shift its focus toward supporting a labor market that is showing signs of moderation. With traders now anticipating rate cuts in both October and December, the environment remains favorable for stocks. 

Adding to the positive momentum, the earnings season has shown exceptional strength. According to LSEG, 87% of S&P 500 companies that have reported so far have beaten estimates, with combined revenue growth being at 10.4% year-on-year. The key test this week, however, will be the earnings from tech giants like Meta, Microsoft, Alphabet, Amazon, and Apple, whose results and—more importantly—their AI spending forecasts are likely to set the tone for the entire market.

From a technical standpoint, SPX has maintained an uptrend since correcting on October 10 and subsequently reaching a new peak at $6,847. The Chaikin Oscillator confirms bullish momentum by kicking in positive and boosting buying pressure. Meanwhile, the RSI (57) sits in a neutral range, implying no immediate overbought or oversold conditions and thereby supporting the ongoing uptrend. A minor pullback is possible as the market digests its swift gains, yet the prevailing sentiment foresees additional price appreciation.

The following trading strategy may come into play:

Buy the S&P 500 index when the price corrects. Take profit can be set around $7,000. Stop loss is placed at $6,780.

This forecast is valid from October 27 till October 31, 2025.