With a stagnant PPI, the Fed is close to the finish line

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Successful week for the markets
All major US indexes rose on Friday on encouraging inflation data and positive earnings from major banks. This gave them a successful week. Europe’s Stoxx 600 index rose 0.55% to end the week in positive territory. Separately, Britain’s economy grew 0.2% on a monthly basis in August after stagnating in June and July, snap data from British officials showed.

Tesla’s Cybercab and Robovan
Tesla Shares fell 8.8% after the company’s “We, Robot” event disappointed investors. At Thursday night’s event, CEO Elon Musk unveiled the Cybercab, a two-seater without steering wheels or pedals, and the Robovan, a large-capacity autonomous vehicle. But Musk provided few other details, leading analysts to cast doubt on the company.

Further assurances from China
In a press conference on Saturday, Chinese Finance Minister Lan Fo’an told reporters that the scope for Beijing to increase its budget deficit was “quite large” but that the government was still discussing stimulus plans, according to a CNBC translation of the Chinese language. Lan also announced measures to support employment and the real estate sector.

Bank earnings are in good shape
JPMorgan Chasethe largest bank in the United States, reported third-quarter earnings and revenue that beat estimates. Net interest income increased 3% year-over-year, helping revenue rise 6%. Wells Fargo had a decent third quarter. The bank beat earnings estimates, but unlike JPMorgan, revenue fell short of expectations and NII fell.

[PRO] Earnings will show the direction of the market
After the deluge of data like the September jobs report and the Consumer Price Index report, earnings will dictate the direction of markets in the near term. Big banks dominate third-quarter reports this week. It is Bank of America And Goldman Sachs’ tune in on Tuesday while Morgan Stanley announces its results on Wednesday.

It appears that higher-than-expected inflation in September was actually an outlier.

With a snap of the fingers, the producer price index dispelled persistent inflation concerns. The index, which measures wholesale prices – and thus generally predicts changes in the CPI – was flat in September from August, beating expectations in a Dow Jones survey of a 0.1% rise.

In fact, last week’s inflation numbers looked so promising that Goldman Sachs believes the Federal Reserve has brought inflation close to its 2% target without crashing the economy, as CNBC’s Jeff Cox reports.

According to the University of Michigan Consumer Survey, while consumer sentiment fell slightly in October, “long-term business conditions rose to their highest level in six months,” wrote Joanne Hsu, the survey’s director.

JPMorgan Chase’s third-quarter results could be the first taste of this. The largest bank in America beat estimates in both revenue and profit. Since banks generally reflect the health of the overall economy, it’s a sign that, despite declining consumer confidence, it’s not all bad.

Admittedly, the returns reflect what has already happened. Investors care more about what will happen. But consumers are doing “well and on solid footing,” JPMorgan CFO Jeremy Barnum told reporters.

Markets cheered the series of positive news.

On Friday, the S&P 500 added 0.61%, the Dow Jones Industrial Average rose by 0.97% and the Nasdaq Composite rose 0.33%.

That capped a successful week for Wall Street – its fifth in a row. The S&P and Nasdaq rose 1.1%, while the Dow fared slightly better with a weekly gain of 1.2%.

“What we are seeing … is an expansion of the market,” said Craig Sterling, head of U.S. equity research at Amundi US.

It’s a reminder that curbing inflation is just a stop to investors’ real goal of creating a healthy stock market.

— CNBC’s Jeff Cox, Samantha Subin and Brian Evans contributed to this story.