On the evening of the 14th Beijing time, the US stock market opened with mixed gains and losses on Monday. A batch of important corporate financial reports will be released one after another this week. The market is also concerned about the uncertainty of the US presidential election, the rise in US bond yields, the loose policy of the Federal Reserve, and geopolitical risks in the Middle East. The European Central Bank will announce its interest rate decision this week.
As of the press time, the three major indexes rose in a straight line, with the Dow Jones falling by 0.07%; the Nasdaq rising by 1.07%; and the s&p 500 index rising by 0.65%.
The just-started US earnings season has become the focus. Multiple companies will announce their earnings this week. These corporate financial reports will be a key test of whether the stock market rebound can continue.
$Citigroup (C.US)$,$Bank of America (BAC.US)$,$Goldman Sachs (GS.US)$And.$Johnson & Johnson (JNJ.US)$They will announce their latest financial results on Tuesday.$Morgan Stanley (MS.US)$United Airlines and Delta Airlines will release their financial reports on Wednesday.$Taiwan Semiconductor (TSM.US)$,$Walgreens Boots Alliance (WBA.US)$,$Netflix (NFLX.US)$And.$Procter & Gamble (PG.US)$Also plans to announce financial reports this week.
Last Friday, JPMorgan and Wells Fargo both announced earnings that exceeded expectations, kicking off the third quarter earnings season on Wall Street in a high-profile manner. The reports from these banks showed a recovery in banking profits, helping drive the market to historic highs last weekend. The S&P 500 index closed above 5800 points for the first time, while the blue-chip Dow Jones Industrial Average also hit a record high.
Despite the recent record highs in the U.S. stock market, investors remain anxious due to the intense competition of the upcoming presidential election in three weeks, rising U.S. Treasury yields, uncertainty surrounding the Federal Reserve's loose monetary policy stance, and escalating geopolitical risks in the Middle East.
Adam Crisafulli, founder of Vital Knowledge, stated that despite this, the 'four macro bullish factors (economic stimulus, resilient growth, downside inflation, and strong corporate performance)' still exist and are powerful enough to overcome high valuations and geopolitical risks, keeping the S&P 500 index on an upward trajectory.
Excluding reinvested dividends, the S&P 500 index has risen by about 22% year-to-date. The bull market has entered its second year, with the benchmark index having increased by approximately 63% since touching a two-year low in October 2022. In recent weeks, U.S. Treasury bond yields have also risen, with the benchmark 10-year Treasury yield surging last week to over 4.1%, used to calculate rates for all types of loans from mortgages to auto loans.
As the outlook for Fed rate cuts becomes more uncertain, bond investors are starting to take defensive measures. Last week's release of unexpectedly high inflation data and weak labor market figures led traders to reduce their bets on the extent of Fed rate cuts for the remainder of 2024, while also pushing U.S. bond yields to their highest levels since July.
Traders have ruled out the possibility of a 50 basis point Fed rate cut in November, as previous data showed U.S. consumer prices slightly above expectations in September, with recent economic data also indicating a strong labor market.
After unwinding positions around the U.S. election this summer, investors are now looking for betting opportunities. Reports suggest that traders are returning to what is known as the 'Trump trade.'
Goldman Sachs' trading team expects that if Trump wins the election, a basket of stocks selected by the bank closely linked to Republican policies will experience significant volatility.
"Since this summer, our Republican policy basket has outperformed stocks, indicating sensitivity to election events. If Trump wins the presidential election and his PredictIt victory probability rises to 100%, these stocks could rise by 8%," the Goldman Sachs trading team, including Faris Mourad, wrote in a report.
In the intense competition for the presidency and Congress, Harris and Trump have put forward dramatically different views on trade, government spending, and economic issues. Companies operating in different countries are dealing with various scenarios—including a Republican or Democratic landslide—that could lead to dramatic exchange rate fluctuations similar to those when Trump was first elected eight years ago.
The Republican policy basket includes regional banks benefiting from deregulation, stocks with exposure to cryptos, energy and commodity related stocks, as well as stocks related to localization and domestic security.
On the data front, this Thursday will see the release of September retail sales and September industrial production data, while Friday will see the release of September new home construction starts and building permit reports.
In the coming week, the highly anticipated monthly US retail sales report, dubbed as the "terror data," will lead the economic calendar. Investors will assess whether the economy is picking up pace again after unexpectedly robust employment reports in September.
Focus stocks
Star technology stocks rose across the board,$NVIDIA (NVDA.US)$,$Adobe (ADBE.US)$Up more than 3%, $ASML Holding (ASML.US)$ up nearly 3%.
dropped nearly 6%, $XPeng (XPEV.US)$Photovoltaic solar stocks weakened,$Baidu (BIDU.US)$falling more than 3%.
Cryptocurrency concept stocks are generally rising, 'large holders' holding their positions.$MicroStrategy (MSTR.US)$,$MARA Holdings (MARA.US)$Increased by more than 5%.
NVIDIA (NVDA.US) rose nearly 3%, CEO Huang Renxun announced that the Blackwell chip has been fully put into production, with strong market demand. Morgan Stanley's report also supported this optimistic view, pointing out that orders are already scheduled for 12 months ahead, and the business and outlook remain strong.
Last Sunday, Huang Renxun expressed his hopes that NVIDIA will eventually deploy 0.1 billion AI assistants to further enhance the company's productivity. He also emphasized that this would not lead to any layoffs. He said: "I hope that NVIDIA will one day become a company with 0.05 million employees, equipped with 0.1 billion AI assistants across various departments of the company."
$Alphabet-A (GOOGL.US)$Rose more than 1%, has requested a federal judge in California to temporarily suspend a comprehensive court order requiring it to open its app store to more competitors during its appeal.
Satellite broadcasting company$Sirius XM (SIRI.US)$Up nearly 7%, Warren Buffett bought $86.73 million worth of stocks within three days, increasing his holdings to 0.10872 billion shares.
$Longboard Pharmaceuticals (LBPH.US)$Surging over 50%, Danish pharmaceutical giant Lundbeck has announced its intention to acquire the company for $2.6 billion in equity value.
Provider of weight loss solutions.$WW International (WW.US)$Rising over 10%, the US FDA will reconsider the decision to ban the prescription version of the weight loss drug, liraglutide.
Editor/ping
