Tuesday’s trading saw the Nasdaq Composite reach a fresh record close, lifted by gains in leading tech stocks and optimism ahead of key earnings releases. Investors watched closely as major companies like Alphabet and Snap reported after the bell, injecting optimism into a week packed with economic and corporate data. While the tech-heavy Nasdaq climbed, the Dow trailed behind, weighed down by struggles in oil and financial stocks. With over 150 S&P 500 companies set to report this week, markets are poised for potential swings as earnings season ramps up amidst persistent economic uncertainties.
Key Takeaways:
- Nasdaq Reaches New Record Close: The Nasdaq Composite rose 0.78%, setting a new record close at 18,712.75 as investors focused on the upcoming earnings reports from major tech companies. This marked the Nasdaq’s eighth positive session in the past nine, driven by optimism in the technology sector as companies prepare to reveal quarterly performance amid high market expectations.
- S&P 500 Posts Modest Gain as Dow Slips: The S&P 500 edged up by 0.16% to close at 5,832.92, while the Dow Jones Industrial Average fell 154.52 points, or 0.36%, to end at 42,233.05. Weak performance in oil-related stocks weighed on the Dow, as crude oil continued its decline following a steep 6% drop on Monday. Despite the downward trend in oil, airline and transportation stocks benefitted, with Delta Air Lines rising 3.76%, American Airlines up 1.84%, and United Airlines gaining 1.32%.
- Alphabet Leads Tech Stock Rally: Alphabet (Google) posted strong third-quarter results, with earnings surpassing analyst expectations due to robust growth in its cloud business. Shares surged as much as 6% in after-hours trading. Tech stocks overall supported market gains, with Alphabet rising 1.91%, Meta Platforms climbing 2.68%, Microsoft up 1.43%, Amazon gaining 1.35%, Nvidia increasing 0.68%, and Apple adding 0.33%. However, Tesla dropped by 1.45%, underperforming its peers. The “Magnificent Seven” tech giants, excluding Tesla, helped lift investor sentiment as anticipation builds around earnings season.
- European Markets Slip Amid Earnings Season: European markets closed lower on Tuesday, with the pan-European Stoxx 600 index declining 0.59%. The FTSE 100 Index closed down 66.01 points or 0.80%. The French CAC 40 dropped by 0.61%, while Germany’s DAX slid 0.2%. HSBC was a bright spot in the market, as its shares rose 3.3% following a strong third-quarter earnings report and the announcement of a $3 billion share buyback. Conversely, Novartis saw a 4.7% drop despite raising its full-year guidance. Investor sentiment was further tempered by economic data from Germany, where the GfK Consumer Climate Index improved to -18.3, surpassing expectations of -20.4.
- Asian Markets Climb as Japan Extends Gains: Asian-Pacific markets saw a generally positive trend on Tuesday. Japan’s Nikkei 225 added 0.77%, closing at 38,903.68, lifted by market optimism following Wall Street’s tech-driven gains. The Topix index rose 0.91% to 2,682.02, despite political shifts as Japan’s ruling Liberal Democratic Party lost its parliamentary majority in Sunday’s election. In South Korea, the Kospi rose 0.21% to 2,617.8, while the Kosdaq gained 0.5%, closing at 744.18. Australia’s S&P/ASX 200 climbed 0.34% to 8,249.2, marking its third consecutive day of gains. However, China’s CSI 300 slipped 1% to 3,924.65, and Hong Kong’s Hang Seng Index was up 0.35%, reflecting mixed sentiment across the region.
- Oil Prices Slip Amid Market Caution: US crude oil prices continued their downward trend, slipping 0.25% to close at $67.21 per barrel, following a significant 6% decline on Monday. Brent crude also fell by 0.42%, ending at $71.12 per barrel. Goldman Sachs projects a potential recovery in Brent oil prices to $77 per barrel by Q4, though risks remain for 2025 due to soft demand from China, robust US production, and OPEC+ plans to reintroduce more supply into the market.
- US Goods Trade Deficit Expands Sharply: The US goods trade deficit widened significantly in September, increasing by 14.9% to $108.2 billion. This rise was largely driven by a surge in imports, continuing the trend of trade weighing on US economic growth in the third quarter. The latest data suggests that trade will detract from GDP for a third consecutive quarter, with the government scheduled to release its preliminary GDP estimate for Q3 on Wednesday.
- Treasury Yields Hold Steady Amid Economic Data: US Treasury yields were relatively stable on Tuesday, with the 10-year yield easing by 1 basis point to 4.268% and the 2-year yield falling by 3 basis points to 4.111%. The recent dip comes as investors await critical economic indicators, including the upcoming October jobs report and private payroll data, which could influence the Federal Reserve’s policy stance. Despite mixed signals in recent data, including lower job openings and robust consumer confidence, investors remain cautious about the outlook for interest rates.
FX Today:
- EUR/USD Holds Steady Amid Mixed Data: The EUR/USD pair remained relatively stable around 1.0813 on Tuesday as US economic data presented a mixed picture, keeping the Euro under pressure. Strong US consumer confidence data contrasted with weaker-than-expected job openings, adding complexity to the pair’s outlook. The pair continues to hover near key support levels, with the 200-period SMA providing a base around 1.0992. Downside risks are evident, with support at 1.0800, while a potential break above 1.0861 (50-period SMA) would signal short-term recovery.
- GBP/USD Attempts Recovery Amid Dollar Weakness: GBP/USD traded near 1.3005, showing signs of resilience as the US Dollar softened slightly on weaker job openings data. The British Pound found support near the 200-period SMA around 1.3145, though upside remains limited by overhead resistance. For sustained recovery, GBP/USD would need to clear the 50-period SMA at 1.2985, which could pave the way toward the 100-period SMA at 1.3023. Key support lies at 1.2950, with a deeper pullback potentially testing levels around 1.2900 if downward pressure persists.
- AUD/USD Maintains Downward Pressure Amid US Dollar Strength: AUD/USD traded near 0.6554, continuing to face selling pressure as the strong US Dollar kept the pair below key moving averages. Immediate resistance at the 50-period SMA around 0.6645 remains intact, reinforcing the bearish outlook. Support is expected at 0.6500, with further downside risks if sellers maintain control. A significant recovery would require a break above the 100-period SMA at 0.6684, though the broader trend remains bearish.
- Gold Pushes Higher Amid Market Uncertainty: Gold prices climbed to $2,772, reflecting increased demand for safe-haven assets as economic uncertainty persisted. The precious metal’s rally aligns with mixed US data, including a drop in job openings, which has led to speculation about a potential shift in Federal Reserve policy. Gold faces resistance at $2,775, with the next major target at $2,800 if the upward trend continues. Key support is positioned at $2,732 (50-period SMA), while a break below this level could prompt a pullback towards the 200-period SMA around $2,656.
Market Movers:
- Ford Falls Sharply on Cost Concerns: Ford shares dropped 8.25% as investors reacted to concerns about high operating costs impacting profit margins. This downturn reflected broader worries in the automotive sector about cost pressures affecting profitability.
- Snap Surges on Earnings Beat Despite Cautious Outlook: Snap shares jumped over 10% in extended trading after it reported stronger-than-expected third-quarter results. However, the company tempered expectations with a cautious fourth-quarter forecast, adding a note of uncertainty.
- Chip Stocks Surge on Market Optimism: Semiconductor companies saw robust gains, with Arm Holdings up 4.77%, Broadcom rising 4.20%, Lam Research advancing 3.79%, and ON Semiconductor climbing 3.41%. Investors remain optimistic about growth in AI and computing, driving demand in this sector.
- Airline and Travel Stocks Rise Amid Lower Oil Prices: Declining oil prices bolstered airline stocks, with Delta Air Lines rising 3.76%, American Airlines gaining 1.84%, and United Airlines up 1.32%. Travel stocks also benefited, as Royal Caribbean Cruises rose 3.46% and Carnival added 1.04%, with lower fuel costs easing operating expense concerns.
- Homebuilder Stocks Decline on Weak Forecasts: DR Horton fell 7.04% after issuing a disappointing revenue forecast for 2025. This set a negative tone for the sector, with PulteGroup down 3.00%, Lennar declining 2.08%, and KB Home slipping 1.74% as investors reassessed near-term growth prospects for homebuilders.
- Coinbase Rises as Bitcoin Extends Gains: Shares of Coinbase rose 1.87% as Bitcoin surged by an additional 4.20% on Tuesday, following a 4.12% gain on Monday. This rally in cryptocurrency prices boosted investor sentiment in the digital asset market, positively impacting Coinbase’s stock.
- Oil Stocks Decline as Crude Prices Slide Further: Oil-related stocks remained under pressure due to ongoing declines in crude oil prices. Chevron dropped 1.13%, ExxonMobil fell 1.15%, Occidental Petroleum slipped 0.87%, and Marathon Oil decreased by 0.67%, reflecting continued uncertainty over future oil demand.
As the day concluded, the Nasdaq reached new heights driven by strong performances in tech stocks, while the Dow lagged, weighed down by declining oil stocks. European markets faced pressure, with mixed results across earnings and economic indicators, as HSBC provided a rare bright spot among a downbeat landscape. In Asia, Japan’s Nikkei led gains amid post-election developments, though China’s CSI 300 struggled. The US goods trade deficit widened, adding to concerns about economic growth, while steady Treasury yields kept market focus on upcoming economic data releases. With tech earnings in full swing and a packed week ahead, investors remain optimistic but mindful of potential volatility in the days leading up to the US presidential election.