Stocks were active and ‘upward’ Friday as investors and traders digested the overwhelming parade of better than expected earnings. Over 70% of reporting companies for the 3rd quarter have shown better-than-expected earnings. Nearly all market sectors reporting were beating analysts’ projections. All three indexes hit new records, with the Dow Jones Industrial Average crossing 47,000, up 2.2%, closing at 47,207.12. The robust market, in the 2nd half of October clawed back much of the ‘down’ sessions in the first half of the month. Even a 3% tag on inflation did not deter investors as buying was heavy. The September report indicated the inflation level was being digested and accepted by the market. The S&P 500 so far in 2025 is up 15% with strong gains the past 2 weeks. As the administration begins to settle tariff roadblocks, a sense of resolve has settled the market.
Stocks were active Monday as better than expected earnings; resolution on trade discussions drove the market. All three indexes reached new records with the Dow Jones Industrial Average surging 337 points landing in new territory. Both the S&P 500 and Nasdaq Composite added 1.2% and 1.9% respectively. Trade talks with China showed preparations were moving along with “more cooperation.” Scott Bessend, Treasury Secretary, reiterated that a “very successful framework” was in place for both heads to begin discussions. Chinese officials also said “there was consensus on both sides.” “There’s a lot of enthusiasm about making a deal with China that won’t necessarily translate into better corporate profits, at least for the near term,” said Melissa Brown, global head of investment research at SimCorp.
Earnings, Artificial Intelligence deals and positive trade negotiations drove stocks higher Tuesday notching more record highs. The Dow Jones added 162 points, finishing the day at another new high for the 15th time while the S&P 500 continued to amaze, reaching its 36th “record close.” Meanwhile, preparations for trade negotiations with China are progressing as both Xi Jinping and President Trump have both shown willingness to move forward.
On Wednesday the Federal Reserve cut interest rates a quarter point, pretty much as expected. Federal Reserve Chairman Jereome Powell cast doubt that another rate cut would occur in 2025. His negative comments pretty much ‘closed the door’ on any more cuts this year. The market turned sour after the rate announcement, as indexes began to draw back with all finishing lower for the session on Wednesday. The Fed board voted 10-2 for the quarter point rate cut with Kansas City board member Jeffery Schmidt advocating no change. Fed governor Stephen Miran was lobbying for a larger cut of one half point. Fed Chair Powell was adamant regarding no more cuts this year commenting: “A rate cut at the Fed’s next gathering in December was a foregone conclusion. Policy is not on a preset course.” Far from it,” he said. The market reacted after Mr. Powell’s comments later Wednesday. The Dow Jones Industrial Average, which was above flatline reversed course dropping 74 points, finishing at 47,632. The heavy-tech Nasdaq Composite was contrary, rising to another new high just over flatline. “The 10-year Treasury yield edged up to 4.056% up from 3.982% the largest one-day climb,” according to TradeWeb. Nvidia became the first company to hit a valuation of $5 trillion.
RUMBLINGS ON THE STREET
Somu Varghese, global macro strategist at Carson Group, WSJ – “I think the earnings data has taken on a little bit more importance, and the overall takeaway so far is that everything looks fine.”
Rob Haworthy, senior investment strategist director at U.S. Bank Asset Management, WSJ – “This could be the start of some profit taking” he added. “Sales are going to beget sales here for a little bit until the weaker hands are shaken out of this market.”
Jason Pride, chief of investment strategy and research at Glenmede, WSJ – “There’s a possibility that investors walked into Monday and decided they don’t want to be underexposed during earnings season.”
About the Author
