October surprise! Dow rallies more than 800 — and 14% for the month — ahead of Fed meeting

A robust, broad-based rally sent Wall Street stocks surging on Friday, as encouraging economic data and a rosier earnings outlook buoyed investor risk appetite ahead of next week’s much-anticipated two-day policy meeting of the Federal Reserve.

The Dow Jones Industrial Average rose by more than 800 points while the Nasdaq rallied more than 300 points. The S&P 500 ended the day up more than 2%.

The rally led to a fourth straight week of gains, pushing the Dow to nearly 33,000, up 14% for the month. The index closed out its best month in more than 30 years.

Experts credited the optimism to a key economic data point that showed inflation could be peaking and there may be light at the end of the tunnel.

The core personal consumption expenditures price index, which is closely followed by the Federal Reserve, showed that inflation remained strong in September, but stayed mostly within expectations, the Bureau of Economic Analysis reported on Friday.

PCE inflation rose 0.3% for September and 6.2% on a yearly basis — the same figures that were recorded in August.

Forrest McCall, a finance expert and owner of the financial site “Don’t Work Another Day,” told The Post that the PCE figure was “in line with expectations and helped to tame fears of ongoing hot inflation.”

“Investors are hoping for a final 75 basis point hike before the Fed eases off the gas pedal and slows further rate-hiking,” McCall told The Post.

The Fed is expected to deliver another jumbo-sized 75 basis-point increase when it meets next week. For December, traders are largely expecting a 50 basis-point increase. 

Guido Petrelli, CEO and Founder of Merlin Investor, told The Post that “it seems like the market is rebuilding trust” after disappointing earnings results from blue-chip tech stocks.

“Technology companies have been those which have been beaten the most, but even if below expectations, they still continue to keep good revenues and high cash reserves,” Petrelli said.

Jamie Cox, the managing partner for Harris Financial Group, told The Post that the markets are already pricing in a 50 basis points hike in interest rates for December.

Cox said that the markets are encouraged by the earnings reports from non-tech companies, including those in the health care, energy, and utilities sectors.

“Supply side inflation is starting to roll over,” Cox told The Post, citing the drop in prices of used cars, gasoline, and shipping rates.

Cox said that the markets in recent weeks have been reacting to the fact that the Fed’s previous rate hikes “have started to take hold.”

“Now [the Fed] will start to back off and reduce the pace of future rate hikes,” he said.

A 7.5% rebound in Apple helped soften the blow of the 6.8% plunge for Amazon shares, in the wake of the two market leaders’ results posted after Thursday’s closing bell.

Solid earnings beats from Chevron and Exxon Mobil and other companies outside the tech and tech-adjacent mega-cap group have brightened aggregate earnings estimates for the quarter.

“In big tech, earnings have been more negative than positive, but outside of tech it’s been more positively skewed in the areas that are more indicative of the Main Street economy,” said Keith Buchanan, portfolio manager at GLOBALT in Atlanta. “It’s easy to miss the forest for the trees.”

With Post wires