Market Momentum Builds as Earnings Season Heats Up
A barrage of earnings results propelled US stocks toward record highs on Wednesday, with investors digesting a mix of positive and negative reports. The Dow Jones Industrial Average soared nearly 350 points, or about 0.8%, to close at a record high of 43,077.70. The tech-heavy Nasdaq Composite gained nearly 0.3%, while the benchmark S&P 500 was up around 0.5% and closed just shy of its own record.
Banking on a Comeback
Morgan Stanley’s quarterly report was a highlight of the day, showcasing fresh signs of a Wall Street comeback. Profits jumped compared to last year, thanks to a rise in dealmaking that has also lifted its peers. Shares rose nearly 7% following the release. The banking sector has been on a tear this week, with strong earnings from big banks driving the Financials sector up more than 26% this year.
Chip Stocks Rebound
After a disappointing earnings report from ASML, chip stocks rebounded on Wednesday, led by a 3.1% bounce back from Nvidia. The artificial intelligence chip trade has been a hot topic, with investors eyeing signs of weakness in the sector.
Earnings Season Highlights
In addition to Morgan Stanley, other notable earnings reports included UnitedHealth Group, LVMH, and Netflix, which is set to report its fiscal third-quarter earnings on Thursday after market close. Analysts are expecting another possible round of price hikes from the streaming giant.
Commodities and Energy
Gold rallied toward a record high as fresh tariff promises from Republican nominee Donald Trump added to uncertainty around the outcome of the tight US presidential race. Meanwhile, a new report from the International Energy Agency predicts clean energy will meet “virtually all” growth in energy demand between 2023 and 2035, leading to a peak in demand for all three fossil fuels before 2030.
Retail Sales Report
The September retail sales report is slated for release at 8:30 a.m. ET, with consensus expecting sales to rise 0.3% in the month. The data comes at a critical time in the economic narrative, as a blowout September jobs report has sparked debate over whether the US economy is actually cooling or starting to show signs of reacceleration.
Small Caps Shine
The small-cap Russell 2000 index is up more than 1.5% on Wednesday, far outpacing the gains of the three major indexes and closing in on its 52-week high of 2,300. Strategists argue that lower rates will benefit the group, and evidence of solid growth has built the case for an allocation to small caps.
Airlines Soar
The US global Jets ETF rose around 3% to hit a fresh 52-week high on Wednesday, following a better-than-expected earnings report from United Airlines. The rally in airlines has been driven by improving earnings and a program to repurchase up to $1.5 billion in shares.
Nuclear Power Partnership
Amazon and Dominion Energy announced a partnership to advance the development of nuclear Small Modular Reactors in Virginia, part of Amazon Web Services’ investment of over $500 million in nuclear power. The move is the latest example of big tech companies exploring nuclear energy to power their artificial intelligence plans.
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