Wall Street Extends Gains Amid Earnings Optimism and Tech Rebound

Alexander Garcia
14 Oct, 2024
Miami

Stock market indexes advanced in Monday's trading as investors remained firmly focused on earnings. 

The S&P 500 index gained 0.6% and the Nasdaq Composite advanced 0.8% after the tech rally broadened to consumer cyclicals, healthcare, and transportation. 

About 120 companies are set to release their quarterly results this week, including Blackstone, Charles Schwab, American Express, Netflix, P&G, and Abbott. 

On the earnings front, Johnson & Johnson, Citigroup, Goldman Sachs, and Bank of America report their quarterly results on Tuesday, and Morgan Stanley, CSX, Las Vegas Sands, and United Airlines report Wednesday. 

The S&P 500 index traded at a new high last week, and the index and the Nasdaq Composite advanced for the fifth week in a row amid rising expectations that the Federal Reserve could engineer a soft landing. 

Despite record highs, investors are on edge because of the recent jump in crude oil prices, rate path uncertainty, and escalating geopolitical risk in the Middle East. 

As of Friday's close, the S&P 500 index has advanced 22.6% and the Nasdaq Composite has jumped 24.2%, excluding dividend reinvestments. 

In the week ahead, investors are looking forward to the release of September retail sales and September industrial output on Thursday, followed by September housing starts and building permits Friday. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.6% to 5,851.06, the Nasdaq Composite rose 0.7% to 18,477.88, and the Russell 2000 index rose 0.3% to 2,241.18.

The yield on 2-year Treasury notes edged lower to 3.97%, 10-year Treasury notes inched up to 4.11%, and 30-year Treasury bonds inched higher to 4.41%.

WTI crude oil decreased $1.90 to $73.65 a barrel, and natural gas prices edged down 12 cents to $2.51 a thermal unit.

Gold fell by $10.17 to $2,646.71 an ounce, and silver decreased by $0.40 to $31.12.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 103.19.

 

U.S. Stock Movers

Boeing declined 1.5% to $148.50 after the aviation company said it plans to cut about 10% of its staff, or about 17,000 jobs. 

The company also estimated third quarter revenue of $17.8 billion, GAAP loss per share of $9.97, and operating cash outflow of $1.3 billion. 

The company also announced a $3 billion charge related to its 777x and 767 programs in its commercial plane division and delayed its first delivery of 777-9 to 2026 and 777-8 freighter in 2028. 

Flutter Entertainment jumped 4.1% to $227.90 after Wells Fargo recommended the stock, urging investors to take advantage of the recent price decline. 

In London, UK trading, Flutter Entertainment and Entain PLC declined as much as 7% after a report suggested that the recently appointed U.K. government is looking to increase taxes on the gambling industry to raise as much as £3 billion. 

Cryptocurrency-related stocks advanced after Bitcoin rose to $64,000. 

MicroStrategy increased 5.8% to $225.12, MARA Holding jumped 6% to $17.08, and Coinbase Global rose 3% to $181.54. 

 

European Markets Meandered as Earnings Season Gathers Pace 

European markets lacked direction in Monday's trading as investor focus remained on earnings season. 

Benchmark indexes in Paris, London, and Frankfurt traded around flatline, and market indexes rebounded in the previous week. 

Investors reviewed the latest earnings results from last week, including updates from BP plc, Continental AG, Stellantis NV, and Porsche Automobil. 

The European Central Bank's rate decision was also in view, and investors are divided about the policymakers decision. 

A significant majority of investors are hoping that the central bank will keep the benchmark rate steady, but some investors are holding out for a rate cut of as much as 25 basis points. 

Crude oil edged lower after rising in the previous two weeks as imminent risks of crude oil supplies receded. 

Investors were on defensive after China's finance minister announced a broad plan to revive the flailing property market and inject additional capital into the banking system. 

But Finance Minister Lan Fo'an failed to provide the amount and timetable for these measures, denting market enthusiasm. 

In the week ahead, investors are awaiting the release of the current account balance, trade show balance, and industrial production in the Euro Area.

The UK is expected to release its retail sales, inflation update, and employment data.

 

Europe Indexes and Yields

The DAX index increased by 0.6% to 19,501.41; the CAC-40 index rose by 0.3% to 7,598.08; and the FTSE 100 index advanced by 0.5% to 8,292.66. 

In the previous week, the DAX index increased 1%, the CAC-40 index added 0.4%, and the FTSE 100 index decreased 0.6%. 

The yield on 10-year German bonds edged lower to 2.26%, French bonds inched lower to 3.04%, the UK gilts edged down to 4.23%, and Italian bonds decreased to 3.54%.

The euro edged lower to $1.09; the British pound inched higher to $1.31; and the U.S. dollar strengthened to 86.04 Swiss cents.

Brent crude decreased $1.82 to $77.20 a barrel, and the Dutch TTF natural gas rose by €0.67 to €40.48 per MWh. 

 

Europe Stock Movers

Mulberry Group PLC soared 18% to 132.90 pence after Frasers Group, the 37% stakeholder in the fashion group, revised its potential cash offer for the remaining stake in the company at 150 pence per share. 

However, the majority shareholder, Challice Limited, with a 56% stake in the company, publicly rejected the revised offer and said it has no plans to sell its stake in the company to Frasers. 

Entain PLC declined 7% to 713.04 pence, and Flutter Entertainment PLC dropped 5.6% to 17,490.0 pence following a report that the UK government is looking to increase taxes on the gambling sector by as much as £3 billion. 

China-linked stocks took a dive for the second session in a row after the country's fiscal stimulus measure announcement fell short of investor expectations. 

LVMH declined 2.7% to €635.0, Kering SA dropped 3.9% to €229.90, and Hermes International dropped 2.8% to €2,084.0. 

 

Japan's Nikkei 225 Stock Average Extended 3-Day Rally, Yen Drifts Near 150-Mark 

Stocks in Tokyo advanced for the third day in a row after the yen drifted lower. 

The Nikkei 225 stock average increased 0.6%, and the Topix index decreased 0.2%.

Stocks retained their upward bias in Tokyo as investors surmised that the Bank of Japan is not likely to raise rates in the imminent future. 

Investors have been on edge over the last five weeks on the worry that the hawkish central bank may continue its aggressive increase in interest rate stance. 

However, market sentiment improved after the recently appointed prime minister, Shigeru Ishiba, urged the central bank to take a gradual approach to raising rates. 

Moreover, officials at the central bank also reiterated the central bank's plan to raise rates in a gradual fashion and avoid excessive depreciation of the yen. 

Investors also reviewed the latest announcement by China's finance minister, Lan Fo'an, over the weekend. 

Finance ministers comments fell short of market expectations, and China-linked stocks headed lower in Monday's trading. 

 

Japan Stock Movers 

The Nikkei 225 Stock Average increased 0.6% to 39,605.80, and the broader Topix index decreased 0.2% to 2,706.20. 

Seven & I Holdings declined 1.4% to ¥2,292.0, and the company announced a restructuring plan to thwart off a hostile takeover offer from Canada-based Couche-Tard. 

Mitsubishi UFJ Financial rose 1.7% to ¥1,552.0, Sumitomo Mitsui Financial advanced 1.5% to ¥3,167.0, and Mizuho Financial gained 1% to ¥3,048.0. 

 

China's Fiscal Stimulus Lacks Details, Stocks Turn Lower In Hong Kong 

Market sentiment in China trading was weak after the finance minister failed to provide clarity on the possible fiscal stimulus measures. 

The Hang Seng index dropped as much as 1.5% and the CSI 300 index edged higher after investors reacted to comments from the finance minister at a press conference held on Saturday. 

At the widely anticipated press conference held by Finance Minister Lan Fo'an, he reiterated the central government commitment to provide additional liquidity to the local banks and provide direct financial assistance to families. 

Minister Fo'an laid out the government's plan in broad terms to bolster the local government's finances and support the purchase of residential units, helping the property development companies. 

The move was widely anticipated, but the plan failed to provide a specific timetable and the size of the stimulus. 

Investors were disappointed by the lack of clarity and urgency on the part of policymakers, which could lead to sharp swings in stock trading in the weeks ahead. 

Moreover, the latest inflation updates indicated continuation of China's deflationary trend in September. 

Consumer price inflation in September slowed to an annual increase of 0.4% from 0.6% in August, the lowest reading in three months, according to the data released by the National Bureau of Statistics. 

Consumer price inflation was positive for the eighth consecutive month, but the increase was the smallest in three months because of the weakness in housing prices and transportation costs. 

Core consumer inflation, which excludes food and energy prices, increased 0.1% from a year ago. 

Producer price inflation, which tracks wholesale prices, declined 2.8% in September, faster than the 1.8% decline in the previous month, the statistics bureau reported in a separate report over the weekend. 

Producer prices contracted for the 24th month in a row and fell at the fastest pace since March. 

 

China's Exports Growth Slowed In September, Trade Surplus Shrank

China's export growth in September slowed sharply to 2.4%, import growth slipped to 0.3% from a year ago, and the country's trade surplus shrank to $81.7 billion from $91 billion in the previous month.

Exports increased to $303.7 billion and imports edged up to $222 billion, and China's international shipments remain the brightest spot in the economy. 

China's exports to the U.S. rose 2.2% and surpassed shipments to the European Union and Association of Southeast Asian Nations. 

Shipments to the European Union increased 1.3%, and Russia advanced 16.6%.

In the nine-month period to September, exports increased 4.3% to $2.6 trillion.

Exports to the U.S. rose 2.8%, the European Union advanced 0.9%, India 2.6%, and ASEAN jumped 10.2%.

 

China Stock Movers 

The Hang Seng index increased 0.2% to 21,284.91 and the CSI 300 index advanced 2% to 3,965.41. 

Alibaba Group declined 0.5% to HK $105.30, JD.com rose 1.6% to HK $169.80, and Tencent.com Holdings dropped 0.8% to HK $435.40. 

Longfor Group rose 2.7% to HK $13.74, China Vanke added 1.4% to HK $7.41, and China Resources Land jumped 7.4% to HK $27.60. 

China International Capital Corp. dropped 5.2% to HK $13.90 after China's securities regulator confirmed that the company is investigated for its lack of due diligence while listing a local chip company in 2021.