Inflation Data Awaited as S&P 500 Rises on Earnings Beat

All eyes are on the U.S. government’s Bureau of Labor Statistics this morning as it prepares to release September’s consumer price index data, originally scheduled for October 15 but delayed by the ongoing government shutdown. The market consensus forecasts another 0.4% monthly inflation increase, mirroring last month’s reading, which would translate to an annualized inflation rate of 3.1% – up 0.2% from August’s level. Core inflation, which excludes the volatile food and energy categories, is expected to climb 0.3% monthly, also resulting in a 3.1% annual rate.

With related government data unavailable due to the shutdown, investors are placing bets that the actual numbers will align closely with expectations. This anticipation has provided a tailwind for equity markets, with the Vanguard S&P 500 ETF (VOO) rising 0.4% in premarket trading. The market’s reaction suggests confidence that the Federal Reserve’s inflation fight remains on track, though the delayed data has created uncertainty about the true state of price pressures in the economy.

While inflation data remains pending, earnings season continues to deliver concrete results, with multiple S&P 500 components reporting better-than-expected quarterly performance. Defense contractor General Dynamics (GD) led the way with a significant earnings beat, reporting Q3 profit of $3.88 per share – 19 cents above expectations. The company also exceeded revenue forecasts, posting $12.9 billion against expectations of $12.5 billion, demonstrating robust demand in the defense sector despite broader economic uncertainties.

Industrial manufacturer Illinois Tool Works (ITW) joined the earnings beat parade, reporting Q3 profit of $2.81 per share, nine cents better than analysts anticipated. Although revenue came in slightly short at $4.1 billion, the company provided optimistic full-year guidance, projecting earnings between $10.40 and $10.50 per share – a nickel ahead of consensus estimates. This forward-looking confidence suggests management sees continued strength in industrial markets through year-end.

Consumer goods giant Procter & Gamble (PG) rounded out the positive earnings news, beating fiscal Q1 earnings by nine cents with $1.99 per share profit. Revenue of $22.4 billion narrowly exceeded the $22.2 billion forecast, showing resilience in consumer spending despite inflationary pressures. The company maintained its full-year earnings guidance range of $6.83 to $7.09 per share, projecting it will beat current consensus estimates by approximately one cent.

The combination of anticipated inflation data and strong corporate earnings creates a complex backdrop for investors. The 0.4% premarket gain in the Vanguard S&P 500 ETF (VOO) reflects market optimism that inflation will not surprise to the upside while corporate profitability remains robust. This dual positive scenario supports the case for continued equity market strength, particularly for S&P 500 components demonstrating earnings resilience.

However, the delayed government data presents challenges for market participants seeking clarity on the economic trajectory. The absence of timely inflation metrics complicates the Federal Reserve’s decision-making process and creates uncertainty about future interest rate policy. Investors will be watching closely to see if the actual CPI numbers validate current market positioning or force a reassessment of the inflation outlook and its implications for stock valuations.