Market Optimism Fueled by Chipmakers and Strong Earnings
Wednesday brought moderate gains to the main U.S. indexes. The S&P 500 added +0.4%, the Nasdaq 100 rose +0.68%, while the Dow Jones slipped slightly by -0.04%. The biggest boost came from technology shares, particularly semiconductor manufacturers. ASML Holding jumped over 2% after reporting record Q3 orders, while AMD, KLA, Intel, Lam Research, and others climbed between +4% and +9%.
Banks Deliver Positive Surprises
The financial sector added to the upbeat tone. Morgan Stanley and Bank of America both reported stronger-than-expected Q3 results, sending their shares more than +4% higher. The strong bank earnings underscored the sector’s resilience amid high interest rates and ongoing fiscal uncertainty tied to the U.S. government shutdown.
Trade Tensions Ease Between the U.S. and China
Investor sentiment was further lifted by signs of easing trade tensions. Treasury Secretary Bessent hinted at the possibility of a “truce” on tariffs, particularly concerning rare earth materials, and confirmed that President Trump is still expected to meet with Chinese President Xi Jinping later this month in South Korea. The news temporarily lowered geopolitical pressure and boosted risk appetite.
The Fed Balances Inflation and Labor Market Risks
Despite the market’s strength, the Federal Reserve’s Beige Book cooled excessive enthusiasm, noting that input costs have risen at a faster pace — a potentially hawkish signal. However, Boston Fed President Susan Collins said it would be “prudent to lower rates a bit further” this year to support employment. Markets are now pricing in a 98% chance of a 25-basis-point rate cut at the October 28–29 FOMC meeting.
Macro Data and the Government Shutdown
The October Empire State manufacturing index jumped to 10.7 versus expectations of a decline — a positive sign for U.S. industry. Yet, the ongoing government shutdown is delaying key economic reports, including jobless claims and trade data. Bloomberg estimates around 640,000 federal workers could be furloughed, pushing unemployment to 4.7%.
Bonds and Gold React
The 10-year Treasury yield edged up to 4.03% as investors rotated back into equities. Gold, meanwhile, hit a fresh all-time high amid safe-haven demand triggered by the shutdown and trade concerns. Shares of gold miners such as Kinross, Barrick, and Newmont rose 3–5%.
Leaders and Laggards
Beyond chipmakers, top gainers included Bunge Global (+12%) after raising its profit forecast and Papa John’s (+9%) after Apollo Global Management reportedly made a $64-per-share buyout offer. On the downside, Sable Offshore fell over -20% following an adverse court ruling, and Progressive dropped -5% after missing premium estimates.
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