Stock Market Overview
The S&P 500 Index remained stable on Tuesday, while the Dow Jones Industrial Average saw a rise of 0.47%, outperforming the Nasdaq 100 Index, which ended slightly down at -0.06%. December E-mini S&P futures dipped by 0.05%, and December E-mini NASDAQ futures fell by 0.08%.
On the whole, stock indexes displayed a mixed performance. The S&P 500 reached a one-week high, and the Dow hit a new all-time record. Positive developments for some companies bolstered market sentiment. General Motors saw a jump of over 14% after adjusting its full-year adjusted EPS forecast upward. Similarly, 3M Co experienced a rise exceeding 7% after raising its forecast for adjusted EPS for continuing operations, and RTX Corp also rose more than 7% after revising its revenue forecast upward. Coca-Cola’s share price increased over 4% following stronger-than-anticipated third-quarter results.
However, not all sectors performed well. Mining stocks faced declines as gold prices fell over 5% and silver over 7% due to continued liquidation pressure following their recent peaks. This downturn in mining also extended to semiconductor stocks, impacting Nasdaq performance.
Gains were limited on Tuesday as the market took a breather after the significant fluctuations of the previous sessions. Investors are watching the ongoing U.S.-China trade negotiations closely. Following President Trump’s renewed threats of increased tariffs on Chinese imports if no agreement is reached by November 1, a meeting with Chinese President Xi Jinping is scheduled for next week during the Asia-Pacific Economic Cooperation Conference in South Korea.
In a minor update on U.S. economic indicators, the Philadelphia Fed’s non-manufacturing activity survey for October dropped to -9.9, marking the lowest result in four months.
The U.S. government shutdown has now extended into its fourth week, impacting market mood and stalling important economic reports. This means delays in essential government statistics, including weekly jobless claims and September payroll data. The Bureau of Labor Statistics has postponed the September Consumer Price Report, which is now set to be released this Friday. Warnings from the White House suggest that a prolonged shutdown could lead to extensive layoffs in areas not prioritized by the Trump administration. Estimates indicate that 640,000 federal employees could be furloughed, resulting in an uptick in unemployment claims and a potential increase in the unemployment rate to 4.7%.
Amid these dynamics, there’s a noticeable shift towards precious metals as safe-haven assets, with gold and silver achieving new highs last Friday due to U.S.-China tensions and the government shutdown.
This week will also be pivotal as the third-quarter earnings season continues. Rising expectations for corporate profits are supporting bullish stock prices. According to Bloomberg Intelligence, 85% of S&P 500 companies that have reported so far have exceeded earnings expectations. Furthermore, over 22% of companies guiding for third-quarter earnings anticipate beating analyst estimates, a figure not seen in a year. However, year-over-year profit growth is projected at just 7.2%, the smallest increase in two years, and sales growth is expected to slow to 5.9% from 6.4% last quarter.
The current market reflects a 97% likelihood of a 25 basis point rate cut at the next Federal Open Market Committee meeting scheduled for October 28-29.
Internationally, stock markets saw gains on Tuesday. The Euro Stoxx 50 reached a new all-time high, closing up 0.10%. The Shanghai Composite in China finished 1.36% higher, while Japan’s Nikkei 225 also closed up by 0.27%.
December 10-year T-note futures ended positively, rising by 5 ticks, while the yield on the 10-year T-note fell by 2.5 basis points to 3.955%. T-note prices increased as investors reacted to the ongoing government shutdown, which could potentially lead to job losses and reduced consumer spending, influencing the Fed’s decisions on interest rates. Despite the drop in the Philadelphia Fed’s non-manufacturing business activity survey to its lowest level in four months, T-notes remained strong.
Meanwhile, European government bond yields also fell on Tuesday, with German 10-year federal bond yields decreasing by 2.5 basis points to 2.552%, and UK 10-year bond yields down by 2.7 basis points to 4.478%. Market expectations suggest only a 2% probability of a 25 basis point rate cut by the European Central Bank at its next meeting on October 30.
In U.S. corporate highlights, General Motors surged more than 14% after revising its full-year adjusted EPS estimate toward the higher end. Halliburton reported third-quarter sales that exceeded expectations, leading to a close up by over 12%. Warner Bros. Discovery gained more than 11% after announcing a review of strategic options to enhance shareholder value.
Other notable stock movements included Gartner, which closed up over 8% following positive commentary about its AI tool, and 3M, which also led gains on the Dow after adjusting its EPS forecasts upward. RTX Corp and Danaher both saw increases as well, reflecting adjustments in their forecasts.
Conversely, mining stocks struggled with gold and silver prices falling, causing Newmont and others to decline significantly. The semiconductor sector was similarly pressured, with several prominent companies recording losses. Cleveland-Cliffs and NuScale Power faced downgrades from major financial firms, leading to sharper declines in their stock prices.
The week ahead is set to feature numerous earnings reports across various companies, highlighting a diverse range of sectors.
