Oct 17, Finance Network (Editor: Niu Zhanlin) On Wednesday, US Eastern Time, despite the underperformance of tech giants, strong earnings from small caps and financial stocks boosted the overall market, with all three major indices closing higher.

The Dow closed above 43,000 points again, recovering most of the lost ground from the previous trading day, with the S&P 500 index just a step away from another closing milestone.

Piper Sandler's Chief Investment Strategist Michael Kantrowitz said: 'I believe investors have shifted from some large tech companies to large financial firms.' He added that the investors' shift makes sense because the interest rate environment is becoming more favorable for bank profitability, while optimistic expectations for AI have long been reflected in the stock prices of tech companies.

Top US banks such as Morgan Stanley and Goldman Sachs have released better-than-expected financial reports, and several regional banks that traditionally do not rely heavily on investment banking business have also exceeded expectations.

Stanley Druckenmiller, billionaire investor and Chairman/CEO of Duquesne Family Office, said that the market is digesting news of a potential Trump victory before next month's presidential election. 'The market seems very convinced that Trump will win, you can see it in bank stocks, you can see it in cryptocurrencies, and you can even see it in Trump's media tech group.'

The Russell 2000 Index, which represents small cap stocks, has risen to its highest level in nearly three years. Morgan Stanley points out that after a poor performance for three and a half years, the recent adjustment of small cap stock positioning to 'neutral.' "Small cap stocks are relatively undervalued, and earnings are expected to improve. To a certain extent, this has been the theme of the Russell 2000 Index for the past two years, but after several years of declining returns, the market generally holds a more optimistic view on future earnings growth."

Adam Tiernquist of LPL Financial stated that due to investor doubtsBut after the bursting of the internet bubble and the Fed's rate cut in 2001, the ROI dropped by more than 10%.about scenarios and the path of monetary policy, small cap stocks have been in a range-bound pattern for the past few months.

"Due to recent better-than-expected economic growth prospects and strengthened expectations of a Fed rate cut, the Russell 2000 Index has rebounded from the lower end of its uptrend channel, with the recent strong performance of the banking sector further supporting small cap stocks."

Market Dynamics

At the close, the Dow gained 337.28 points, up 0.79%, to 43,077.70 points; the Nasdaq rose 51.49 points, up 0.28%, to 18,367.08 points; the S&P 500 Index increased by 27.21 points, or 0.47%, to 5,842.47 points.

US industry ETFs closed higher overall, with the global aviation industry ETF up over 4%, the utility ETF up nearly 2%, regional bank ETFs and financial ETFs up over 1% each, consumer discretionary ETFs, energy ETFs, and biotech index up around 0.5%.

Popular stocks performance

Most large-cap tech stocks declined, with Intel and Meta down more than 1%, while Amazon, Google, Microsoft, Netflix, and Apple fell slightly; Nvidia rose more than 3%, and Tesla edged up slightly.

Novavax's stock price plummeted nearly 20% after a severe motor neuron disease incident occurred in a trial participant, prompting the U.S. Food and Drug Administration (FDA) to halt the company's clinical trial of the 'flu/covid-19 combination vaccine.'

Trump Media & Technology Group surged over 15%, accumulating nearly 95% gains this month as investors continue to bet on the U.S. election.

Morgan Stanley rose 6.5%, with the company's key financial indicators surpassing market expectations, and revenue from all three major divisions exceeding Wall Street's forecasts.

The nuclear power sector saw significant gains, with Dominion Energy up 6.6%, Oklo up 42%, and NuScale Power up 40%; Amazon Web Services (AWS) announced a partnership agreement with Dominion Energy to invest hundreds of millions of dollars to develop small modular reactors, also known as SMRs.

China concept stocks experienced mixed movements, with the Nasdaq China Golden Dragon Index rising by 0.93%. iQIYI surged over 2%, Baidu, Bilibili, and JD.com rose over 1%, while Full Truck Alliance and Alibaba edged up slightly.

Company news

Airbus, the European aviation giant, announced plans to cut 2,500 jobs in its aerospace and defense sectors.

On Wednesday local time, European aviation giant Airbus announced plans to cut 2,500 jobs in its aerospace and defense sectors due to a "complex business environment", particularly challenges of rising costs and rapid changes in "warfare tactics". Airbus expects the layoffs to be completed by mid-2026, representing approximately 1.7% of its total workforce. However, the company did not disclose in which countries the layoffs would take place. Mike Scherhorne, CEO of Airbus' aerospace and defense sectors, stated that it is time to take further actions in the "increasingly difficult space market", with layoffs being part of a broader restructuring aimed at making the department faster, more streamlined, and more competitive.

Alcoa, the American aluminum company, reported third-quarter adjusted EBITDA better than expected.

Alcoa reported an adjusted EBITDA of $0.455 billion in the third quarter, below the analyst's expectation of $0.3904 billion; third quarter sales were $2.9 billion, slightly lower than the analyst's expectation of $2.98 billion; adjusted EPS in the third quarter was $0.57, higher than the analyst's forecast of $0.25; still forecasting aluminum shipments for the full year at 2.5 million to 2.6 million metric tons; and estimated full-year aluminum oxide shipments at 12.9 million to 13.1 million metric tons.

Apple's Chief People Officer, who has been in the role for less than two years, is set to resign.

According to informed sources, Apple's Chief People Officer, Carol Surface, is about to resign. Apple employees received Surface's resignation notice on Wednesday. Surface joined Apple in 2023, taking over the Chief People Officer position from Deirdre O'Brien, who not only manages the company's retail stores but also the HR team. With Surface's departure, O'Brien will return to her previous role, managing both departments.

General Motors invests $0.625 billion in a top lithium project in the United States.

General Motors will invest $0.625 billion in one of the largest lithium mines in the USA to strengthen the auto manufacturer's efforts to ensure the supply of electric vehicle battery metals. This cash credit financing agreement announced on Wednesday is based on General Motors' investment of $0.32 billion in Lithium Americas Corp. last year.