CPI Drives Inflation Narrative 10/04/2026

HOT stories for today

Market wrap:

• Stocks rose Thursday, adding to this week’s gains after President Donald Trump agreed to pause attacks on Iran for two weeks. The S&P 500 climbed 0.62%, while the Nasdaq Composite gained 0.83%. The Dow Jones Industrial Average added 275.88 points, or 0.58%, moving back into positive territory for 2026. Equities extended their advance as oil retreated from session highs. Sentiment improved after Israeli Prime Minister Benjamin Netanyahu said Israel was prepared to begin negotiations with Lebanon “as soon as possible.” Still, the broader backdrop remained fragile. Iranian parliamentary speaker Mohammad Bagher Ghalibaf cited Israel’s continued strikes in Lebanon as a breach of the U.S.-Iran ceasefire agreement. The Strait of Hormuz remained largely shut, with tankers carrying tens of millions of dollars worth of crude appearing reluctant to transit the waterway. Even so, oil paused its climb after Israel signaled a willingness to negotiate with Lebanon, offering some relief to markets.
• Inflation data released Thursday did little to alter the broader picture. Headline PCE held at 3% from a year earlier, while core PCE eased modestly on an annual basis but maintained the same monthly pace as in February. PCE including food and energy was unchanged year over year at 2.8%, though the monthly increase in February came in slightly above January’s pace. Consumer spending barely rose, underscoring the strain from war and still-elevated living costs. At the same time, recurring jobless claims declined, suggesting displaced workers are continuing to find employment. Investors now turn to the next round of economic data, including March consumer prices. Economists surveyed by Dow Jones expect CPI to rise 0.9% from the prior month and 3.3% from a year earlier. Durable goods orders and factory orders are also due.

Economy Enters 2026 on Weak Footing

• The U.S. economy was already losing momentum before the Iran war added fresh pressure, and the path ahead looks increasingly difficult. Gross domestic product in the fourth quarter was revised down again, to a 0.5% annualized pace from 0.7%, marking a sharp slowdown from the initial 1.4% estimate. The latest reading underscored how much growth had cooled by year-end. By comparison, the economy expanded at a 4.4% pace in the third quarter of 2025 and 3.8% in the second. The revised figures suggest the U.S. entered 2026 with little momentum. “The latest revision reinforces the picture of an economy that was already losing steam as the fourth quarter drew to a close,” Michael Hewson, senior market analyst at iForex, said. A record-long government shutdown weighed on activity in the quarter, cutting federal spending and leaving furloughed workers without pay until the standoff ended. But the weakness was not limited to Washington. Inventory accumulation slowed more sharply than previously estimated, residential construction softened and consumer spending was marked down to a 1.9% gain from 2%. 
• The economy appears to have remained sluggish in the first quarter. The Atlanta Fed’s GDPNow tracker most recently pointed to growth of just 1.3%, as severe winter weather and the outbreak of war with Iran at the end of February weighed on activity. The conflict drove rates higher and rattled equity markets, adding to an already fragile backdrop. Households are also facing the strain of stubborn inflation and slower wage gains, while the Federal Reserve has limited room to provide support as price pressures remain elevated. Taken together, the outlook suggests a rough stretch for the economy through at least early summer. A lasting end to the Iran conflict could help ease some of the drag, though disruptions to global trade and energy flows may linger for months even if a deal is reached. Businesses are also seeking greater clarity on trade policy after the Supreme Court rejected the original Trump tariffs, while larger tax refunds and higher federal spending to replenish supplies used during the Iran conflict may provide some support to growth.

Stocks on the move:

• Palantir (PLTR): fell 7.3% as the AI-displacement trade pressured software shares after short seller Michael Burry said Anthropic was “eating Palantir’s lunch,” a comment he later deleted.
• Amazon (AMZN): gained 5.61% after Chief Executive Officer Andy Jassy said in his annual shareholder letter that AWS AI annualized revenue had surpassed $15 billion.
• Sandisk (SNDK): surged 9.05% after Bernstein raised its price target to $1,250.
• Zscaler (ZS): dropped about 3% after BTIG cut the cloud security company to neutral from buy and removed it from its top picks for the first half of 2026, citing a more cautious outlook.

Watchlist: PLTR, META, SNDK, MU, COIN, AVGO, XOM, UAL

Key Economic Events Today:

EST time
08:30 am: USD Core CPI, CPI
08:30 am: USD Unemployment Claims
10:00 am: USD Consumer Sentiment
10:00 am: USD Inflation Expectations
10:00 am: USd Factory Orders


Earnings

BMC (Before Market Open): Toro Corp. (TORO),  Uxin Ltd. (UXIN)


The TEFS Analyst team wishes you a successful day!