Indices
- Dow 47,207 (record close), +1,017 or +2.20%.
- Nasdaq 23,204 (record close), +525 or +2.32%.
- S&P 6,791 (record close), +127 or +1.91%.
- MSCI EAFE 2810.88, +34.51 or +1.24%.
- USD10Y 3.997%, -1.0bp or -0.25%.
- WTI Crude $61.44/bbl, $3.90 or +6.78%.
Markets Soar on Earnings and CPI
All three major indices closed at new highs on Friday, supported by better-than-expected corporate earnings and a relatively benign Consumer Price Index (CPI) report.
The week started strongly as both Western Alliance (WAL) and Zions Bancorp (ZION) eased market concerns about credit quality. Despite last week’s charge-downs, both reported solid results, beating top- and bottom-line projections.
Third-quarter earnings continued at a healthy pace. General Motors (GM) delivered a standout quarter, Coca-Cola (KO) and Lam Research (LRCX) exceeded estimates, American Airlines (AAL) reported better-than-expected results, Ford (F) rallied on strong earnings, and Procter & Gamble (PG) topped projections as well.
A few companies raised questions with their results. Tesla (TSLA), trading at an ultra-premium valuation, beat revenue expectations but missed earnings, prompting concerns that demand may have been pulled forward ahead of the expiration of federal EV credits. Netflix (NFLX) missed earnings projections, citing a dispute with the government of Brazil.
On Friday, headline and core CPI data came in 0.10% below expectations. Markets responded positively, as this increases the likelihood of a 25-basis-point rate cut when the Federal Reserve meets later this month, and potentially clears the way for another 25-basis-point cut in December. Notably, while core CPI declined year-over-year, the headline CPI reading of +3.0% is the highest since January.
Looking Ahead: October 27–31
Government economic reports will be delayed again this week as the shutdown enters its fifth week. However, the disruption will not affect the FOMC’s interest-rate decision nor Fed Chair Powell’s press conference, both scheduled for Wednesday.
It’s also a major week for earnings, with technology behemoths Alphabet (GOOG) and Apple (AAPL) reporting. Industrial names Boeing (BA) and Caterpillar (CAT), along with energy giants Exxon Mobil (XOM) and Chevron (CVX), are also scheduled to release results.
Economic Calendar
- Monday – September Durable Goods Orders*.Earnings: N/A.
- Tuesday – October Consumer Confidence. Earnings: N/A.
- Wednesday – FOMC interest rate decision, Fed Chair Powell press conference. Earnings: Boeing (BA), Caterpillar (CAT), Alphabet (GOOG).
- Thursday – Initial Jobless Claims*, Q3 GDP*. Earnings: Amazon (AMZN), Apple (AAPL), Coinbase (COIN)
- Friday – September Personal Consumption Expenditure (PCE). Earnings: Exxon Mobile (XOM), Chevron (CVX).
*Pending the end of the government shutdown
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