Market Update

The S&P 500 Index saw a gain of 1.01% today, while the Dow Jones Industrial Average rose by 0.86%. The Nasdaq 100 Index increased by 1.29%. In the futures market, December E-mini S&P futures went up by 1.01%, with December E-mini Nasdaq futures climbing 1.31%.

Stock index futures increased today, building on last Friday’s upward movement. Both the S&P 500 and Nasdaq 100 reached one-week highs, thanks in part to easing U.S.-China trade tensions. President Trump mentioned on Sunday, “I think we’ll be fine with China,” which seemed to uplift market sentiment. There’s also a general optimism that upcoming third-quarter results will surpass expectations.

Treasury Secretary Bessent noted that the U.S. and China are set to have discussions in Malaysia this week, which will pave the way for a meeting between President Trump and Chinese President Xi Jinping later this month during the Asia-Pacific Economic Cooperation meeting in South Korea.

Positive economic headlines from China contribute to a more optimistic outlook for global growth. China’s GDP for the third quarter increased by 1.1% quarter-over-quarter and 4.8% year-over-year, which beat expectations. Furthermore, industrial production in September rose by 6.5% compared to the same month last year, also exceeding expectations. Interestingly, China’s unemployment rate fell by 0.1% to 5.2%, demonstrating a stronger labor market than analysts had predicted.

In the U.S., the government shutdown has extended into its fourth week, affecting market sentiment and delaying significant economic reports. The release of weekly new jobless claims and the September payroll reports has been postponed, among others. The Bureau of Labor Statistics has announced the September Consumer Price Report will now be released this Friday. There are concerns that if the shutdown continues, it could result in widespread layoffs for certain government programs not aligned with President Trump’s priorities. Estimates suggest that around 640,000 federal workers may be furloughed, potentially driving up unemployment claims and pushing the unemployment rate to 4.7%.

Amid the trade tensions with China, the ongoing government shutdown, and worries about U.S. credit quality, the demand for safe-haven assets like precious metals has increased. Last Friday, gold and silver prices reached new highs.

This week, market attention will shift towards earnings, as the third-quarter earnings season progresses. Many are optimistic about corporate profits, with 85% of S&P 500 companies reporting so far having exceeded expectations. In fact, more than 22% of companies that provided guidance anticipate beating analyst estimates, which is notably the highest level in a year. However, projected profit growth is expected to be 7.2% year-over-year, the slowest increase in two years. Sales growth in the third quarter is also on track to decelerate to 5.9% year-over-year, down from 6.4% in the previous quarter.

Currently, there’s a strong belief—about 99%—that the Federal Open Market Committee (FOMC) will implement a 25 basis point rate cut during its meeting scheduled for October 28-29.

Looking overseas, stock markets are on the rise as well. The Euro Stoxx 50 has hit a two-week high with a gain of 0.96%, China’s Shanghai Composite finished up 0.63%, and Japan’s Nikkei Stock Average reached a fresh all-time high, climbing by 3.37%.

In the bond market, December 10-year Treasury notes were up by 2 ticks today, while the yield on 10-year notes decreased by 1 basis point, landing at 3.999%. This rally can largely be attributed to a drop in inflation expectations, following a decline in the 10-year breakeven inflation rate. The ongoing shutdown could certainly contribute to more job losses and reduced consumer spending, hence the Fed’s inclination to lower interest rates further.

Today’s stock rally has resulted in lower demand for safe-haven government bonds, which in turn has limited the increase in T-note prices. The easing of trade tensions, primarily after President Trump’s remarks about U.S.-China relations being “okay,” has also affected demand for these bonds.

European bond yields are displaying mixed results today. The yield on 10-year German bonds increased by 0.7 basis points, reaching 2.588%, while UK 10-year bond yields dropped by 1.5 basis points to 4.516%.

Germany’s September PPI fell by 0.1% month-over-month and 1.7% year-over-year, a bit below expectations of a slight increase.

On a different note, S&P Global Ratings downgraded France’s sovereign debt credit rating from AA- to A+, citing heightened budget uncertainty.

Market expectations also suggest only a 2% chance of the European Central Bank cutting rates by 25 basis points at the next policy meeting on October 30.

In the U.S., the so-called “Magnificent Seven” tech stocks are bolstering the market, with Apple rising over 3% and Meta Platforms increasing by more than 1%. Other key players like Alphabet, Amazon, and Tesla have all gained over 1%, while Microsoft and NVIDIA have also seen upturns.

Chipmakers and AI stocks are part of the broader market rally too, with ON Semiconductor leading the Nasdaq 100 with a jump of over 7%. Other companies like Super Micro Computers and KLA Corp have also seen gains of more than 4%.

After recently hitting a 3.75-month low, cryptocurrency-related stocks are bouncing back as Bitcoin’s price rises by over 3%. This has benefited companies like Coinbase and Galaxy Digital, among others.

In the healthcare sector, Celcuity Inc. surged more than 45% after announcing significant improvements in a breast cancer treatment trial. Cleveland-Cliffs also saw a notable uptick of over 22% owing to a smaller-than-expected loss in the third quarter.

Lululemon Athletica gained more than 4% following an upgrade from BNP Paribas Exane, while The Cooper Company rose over 4% amid news of a potential acquisition.

On the downside, AppLovin saw a drop of more than 3% after reports that regulators contacted short sellers regarding the company. Meanwhile, Progressive Corp. fell over 2% following a downgrade by Morgan Stanley.

Looking ahead to upcoming earnings reports, companies such as AGNC Investment Corp and Cleveland-Cliffs Inc are expected to announce results on October 20.