Stocks back higher, despite trade and credit market worries

Macroeconomic/ geopolitical developments

• US equities climbed last week, with the S&P 500, Nasdaq, and Dow each advancing around 2% as easing Treasury yields, AI-related deal activity, and rate-cut expectations offset volatility from trade tensions and the government shutdown.

• US-China trade tensions eased last week after both sides struck a more conciliatory tone, with President Trump calling proposed tariffs “not sustainable” and confirming plans to meet President Xi later this month, helping to calm markets after weeks of escalating rhetoric.

• Federal Reserve Chair Jerome Powell and several officials adopted a more dovish stance last week, signaling growing concern over labor market weakness and reinforcing expectations for further rate cuts in the coming months.
• US stocks faltered late last week after loan fraud disclosures at Zions Bancorporation and Western Alliance reignited worries over regional bank credit quality, briefly unsettling markets before stabilizing on stronger earnings from larger lenders Friday.

• The third-quarter earnings season opened strongly, with major US banks surpassing profit and revenue expectations and broader S&P 500 results tracking above forecasts, signaling robust corporate profitability and boosting investor confidence.
• A busy week lies ahead with major earnings from Netflix, Tesla, IBM, and Intel alongside the delayed US September CPI report, which is expected to show inflation edging higher just before the Fed’s October 29 meeting, these are key events that could shape market sentiment amid ongoing volatility and limited economic data from the government shutdown.

Global financial market developments

• US and global equity averages were higher.
• US and European bond yields were lower on the week
• The US Dollar Index moved lower on the week.
• Gold futures pulled back Friday, from another record high.
• Oil futures prices pushed down to a multi-month low.

Key this week

Central Bank Watch: It’s a quiet week on the central bank front, with the key event being the People’s Bank of China’s interest rate decision scheduled for Monday.

Macro Data Watch: With the US government shutdown extending into another week, US data releases remain sparse apart from the CPI on Friday. Key non-US highlights include global Flash PMI readings, Chinese GDP report, and CPI figures from the UK and Canada.

Earnings Watch: The US third-quarter earnings season kicked off last week, and attention now shifts to upcoming reports from major names such as Netflix, Tesla, IBM and Intel.

Steve Miley (The Market Chartist)

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued