Key Highlights

● Brent crude settled at $113.17, its highest since May 4.

● Initial jobless claims fell to 194,000, below the 200,000 expected.

● The Leading Economic Index was unchanged for September, versus an expected decline.

● Homebuilders and utilities rallied on falling yields.

Investors have circled Thursday, October 29, on their calendars. That day brings third-quarter gross domestic product and September personal consumption expenditures data, along with earnings from Amazon (NASDAQ:AMZN), Intel (NASDAQ:INTC) and Caterpillar (NYSE:CAT).

The timing is striking. The releases come one day after the Federal Reserve announces its rate decision on October 28, and after a week of heavy swings in stocks and bonds.

Why PCE matters

The PCE price index is the Federal Reserve's preferred inflation gauge. It tracks the prices of a broad basket of goods and services consumed by households. Because the Fed uses it to judge progress on its inflation goal, it can move expectations for interest rates.

The September reading will cover a period when energy prices were rising. Brent crude settled at $113.17 on Thursday, October 22, its highest since May 4, and was below $97 at the start of October. High fuel costs have shown up in corporate results: Procter & Gamble (NYSE:PG) executives said, "Oil at $113 means more is coming in Q3 and Q4."

Why GDP matters

The GDP report will show how fast the US economy grew in the July-to-September quarter. Investors will look for signs of whether higher energy costs and elevated interest rates are slowing growth.

Recent data offer mixed signals. Initial jobless claims fell to 194,000 in the week ended October 17, below the 200,000 expected and the fewest in about three months. Continuing claims rose by 25,000 to 1.728 million. The Leading Economic Index was unchanged for September, versus an expected decline.

The Fed backdrop

The Fed has raised rates once this year. Market pricing for a hike at next week's meeting fell on Thursday, while reports said markets price about one more hike before year-end.

"I don't prejudge meetings," Fed Chair Kevin Warsh said at an earlier International Monetary Fund meeting.

Because the PCE report comes a day after the decision, it will shape expectations for the Fed's next moves rather than next week's outcome.

Bonds have already moved

Treasuries rallied sharply on Thursday, and the 10-year yield closed back below a closely watched threshold for the first time since September 22. The move came as investors fled AI and chip stocks.

"If oil is about to spark an inflation wave, the bond market hasn't heard about it," one market commentator said.

Not every bond signal was calm. A five-year Treasury Inflation-Protected Securities auction on Thursday was weak, drawing the lowest bid-to-cover ratio since April 2025 and the highest yield in three years. One columnist has questioned the role of bonds in portfolios, writing: "They are no longer the hedge or portfolio diversifier they used to be."

The data arrive at a sensitive moment for stocks. On Thursday, the Nasdaq Composite sank 694 points to 26,008.86, its steepest drop since June 5, and the S&P 500 fell 93.74 points to 7,663.43, its worst day since July. Homebuilders and utilities rallied on falling yields.

Energy costs, yields and the October 28 run-up

Investors will watch whether PCE inflation shows energy costs spreading into broader prices, which could push yields back up. A strong GDP reading could ease growth fears but also complicate the rate outlook.

Before then, purchasing managers' index data and the University of Michigan's final sentiment reading arrive on Friday, October 23, followed by the Fed decision and earnings from Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) on October 28.