Major stock indexes ended up on the last trading day of the week, with all three major US stock indexes posting record closing highs following news that US inflation rose less than expected last month.

The US consumer price index rose 0.3 percent last month, slightly less than the expected 0.4 percent, after climbing 0.4 percent in August.

That reinforced expectations that the Federal Reserve will cut interest rates at its policy meeting next week.

"Today's inflation data shows that we're not in a crisis like 2022. Prices are growing, but at a controlled pace," said Callie Cox, chief market strategist at Ritholtz Wealth Management.

"That's good news if you're hoping the Fed will continue to cut interest rates."

The Fed is expected to reduce rates two more times this year, with a quarter-percentage-point cut baked in for the October 28-29 meeting, according to London Stock Exchange Group (LSEG) calculations using rate futures.

Upbeat earnings reports also boosted Wall Street indexes.

Ford Motor shares jumped 12.2 percent after the company beat third-quarter profit expectations.

Analysts now expect third-quarter S&P 500 earnings growth of 10.4 percent year on year overall.

That is up from estimated growth of 8.8 percent for the quarter at the start of the month, according to LSEG.

The Dow Jones Industrial Average rose 472 points, or 1.01 percent, to 47,207, the S&P 500 rose 53 points, or 0.79 percent, to 6,791 and the Nasdaq Composite rose 263 points, or 1.15 percent, to 23,204.

The S&P 500 and the Nasdaq recorded their largest weekly percentage gains since August, while the blue-chip Dow logged its biggest Friday-to-Friday jump since June.

Five of the so-called Magnificent Seven US companies at the center of the artificial intelligence boom, including Apple and Microsoft, are due to report earnings next week.

US stock markets have surged this year, and some analysts see signs of a bubble. MSCI's gauge of stocks across the globe rose 6.28 points, or 0.63 percent, to 1,001 and hit an all-time high of 1,002.

European shares also closed at a record high on Friday, boosted by the cooler US inflation data.

The pan-European Stoxx 600 index ended up 0.23 percent. (Reuters)