Tame Inflation Report, Tech Earnings Put 7000 Point S&P 500 in Sight

Core Viewpoint - U.S. stocks are expected to experience solid gains as inflation pressures moderate, potentially leading the S&P 500 to reach 7000 points by year-end, marking a 20% annual gain [2][6][9]. Inflation and Economic Indicators - The September inflation report indicated a 3% increase from the previous year, aligning closely with Wall Street's forecast of 3.1%, with a monthly rise of 0.2% [3][6]. - The report suggests that the Federal Reserve may lower its benchmark lending rate, with projections indicating a drop to between 3.5% and 3.75% by year-end [4][5]. Earnings Projections - S&P 500 third-quarter profits are projected to rise by 10.4% to approximately $580 billion, an increase of $8 billion from earlier forecasts [6][7]. - The "Magnificent Seven" tech stocks are expected to report a collective earnings growth of around 16.6%, indicating improved market breadth [8]. Market Trends and Historical Context - Historical data suggests that investors entering the market around late October typically see a 3.5% gain in the S&P 500 over the following three months, compared to a median gain of 2% [9]. - Improved market breadth is anticipated to provide resilience against recent market volatility and headline risks, including U.S.-China trade tensions and a government shutdown [10].