Indices
- Dow 46,190, +711or +1.56%.
- Nasdaq 22,679,+475 or +2.14%.
- S&P 6,664, +112or +1.71%.
- MSCI EAFE 2776.37, -34.04 or -1.21%.
- USD10Y 4.007%, -4.4bp or -1.09%.
- WTI Crude $57.54/bbl, -$1.30 or -2.21%.
Earnings Buoy Markets Despite Credit Concerns
Markets navigated a volatile week, overcoming midweek credit worries to finish higher. Despite a brief selloff on Thursday, strong corporate earnings helped all three major U.S. indices close the week up between +1.5% and +2%.
The week began calmly but turned turbulent on Thursday when regional bank stocks came under significant pressure. The SPDR S&P Regional Banking ETF (KRE) fell -6.2% after a series of credit-related headlines. Zions Bancorp (ZION) disclosed a sizable markdown tied to two borrower bankruptcies, while Western Alliance (WAL) reported a potential fraud issue involving one of its clients. These events, coupled with two recent auto parts bankruptcies (First Brands and Tricolor), reignited concerns over private credit quality. Zion’s (ZION) dropped -13.14%; Western Alliance (WAL) declined -8.52%, and Jefferies (JEF), an investment bank with heavy exposure to regional lenders, fell -10.62% and is down -25% over the past month.
Despite those jitters, strong earnings across multiple sectors kept investor sentiment buoyant. Major money-center banks posted solid results, while transportation companies J.B. Hunt (JBHT) and CSX (CSX) both delivered upbeat reports. American Express (AXP) exceeded expectations, fueled by strong spending among affluent customers. Semiconductor names also shined: ASML (ASML) reassured investors about 2026 growth prospects, Taiwan Semiconductor (TSM) delivered outstanding results, and Broadcom (AVGO) announced a new partnership to supply chipsets to OpenAI.
Looking Ahead: October 20 – 24
Despite the ongoing government shutdown, the Bureau of Labor Statistics has stated that the September Consumer Price Index (CPI) report will be released on Friday. However, unless the shutdown is resolved, the Initial Jobless Claims report will be delayed for the fourth consecutive week. Other key releases include the Leading Economic Indicators (LEI) on Monday and preliminary readings of October’s manufacturing and services data.
On the corporate front, Q3 earnings season shifts into full gear. High-profile companies across the consumer sector - Netflix (NFLX), Tesla (TSLA), Coca-Cola (KO), and Procter & Gamble (PG) - are scheduled to report, alongside key industrial names such as General Motors (GM), Ford (F), American Airlines (AAL), and Alaska Air (ALK).
Economic Calendar
- Monday – September U.S. Leading Economic Indicators. Earnings: Zion’s (ZION).
- Tuesday – N/A. Earnings: General Motors (GM), Netflix (NFLX), Coca-Cola (KO), Western Alliance Bancorp (WAL).
- Wednesday – N/A. Earnings: Lam Research (LRCX), Tesla (TSLA).
- Thursday – Initial Jobless Claims*. Earnings: American Air (AAL), Alaska Air (ALK), Ford Motor (F).
- Friday – September Consumer Price Index (CPI). Final October Consumer Sentiment. October Flash U.S. Manufacturing and Services PMI. Earnings: Proctor and Gamble (PG).
*Pending the end of the government shutdown
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