[New York Stock Market] Broad Rise Led by Strong Corporate Earnings and Small-to-Mid Cap Rally... Nvidia Up Over 3%

79% of S&P 500 Companies Report Earnings Surprises
Small and Mid-Cap Russell 2000 Index Up 1.64%
Focus on September Retail Sales to Be Released on the 17th

The three major indices of the U.S. New York Stock Exchange all closed higher on the 16th (local time). As the market digests the earnings season that began in earnest late last week, small and mid-cap stocks showed strength. Nvidia, the AI leader that fell nearly 5% the previous day, rebounded more than 3%.

On this day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average closed at a record high of 43,077.7, up 337.28 points (0.79%) from the previous trading day. The large-cap-focused S&P 500 index rose 27.21 points (0.47%) to 5,842.47, and the tech-heavy Nasdaq index ended trading at 18,367.08, up 51.49 points (0.28%).

By individual stocks, Morgan Stanley, which beat market expectations in both third-quarter sales and profits, jumped 6.5%. United Airlines surged 12.44% on better-than-expected earnings and a strong fourth-quarter outlook. Nvidia rebounded 3.13% after falling 4.53% the previous day. Dutch semiconductor equipment maker ASML, which plunged 16.26% the day before due to expectations of reducing its China business exposure, fell another 6.42% on this day.

Early in the earnings season, corporate results are exceeding Wall Street expectations. According to market research firm FactSet, 50 companies in the S&P 500 have reported third-quarter earnings, with 79% of them posting results above market forecasts.

The rise in small and mid-cap stocks was also notable. The Russell 2000 index, composed of small and mid-cap stocks, rose 1.64% on the day, significantly outperforming the three major New York indices.

David Russell, Global Market Strategist at TradeStation, analyzed, "Investors may want to move away from large tech stocks, which they hold a lot of and may have few clear catalysts," adding, "As the election approaches and the economy balances out, a rotation from large caps to other stocks could come soon."

On Wall Street, opinions are divided between forecasts of increased market volatility due to uncertainty over the U.S. presidential election on November 5 and views that this presents a buying opportunity.

Sam Stovall, Chief Investment Strategist at CFRA Research, said, "September in an election year is usually negative for the market, but if September is good, October tends to be positive," suggesting that considering the September market rally, the market could rise in the short term. Craig Johnson, Market Strategist at Piper Sandler, stated, "The stock market reached new highs and succumbed to some profit-taking, but the uptrend remains intact, so the pullback is expected to be short-term," adding, "We view short-term declines within an uptrend as buying opportunities."

On the other hand, there are also views that uncertainty will increase ahead of the election. Bryn Turkington, Managing Partner at Liquidity Capital Management, predicted, "As investors go through the earnings season and the election period, the stock market could be volatile in the coming weeks."

Investors are focusing on the U.S. Commerce Department's retail sales data for September, to be released on the 17th. Experts expect retail sales last month to have increased by 0.3% from the previous month, a larger increase than August's 0.1%. Some on Wall Street, including Bank of America (BoA), expect retail sales to have risen by 0.8% last month. If retail sales prove stronger than expected following a significant increase in September nonfarm payrolls, the U.S. economy is likely to gain more weight for a no-landing scenario, where growth continues without a recession.

Government bond yields were slightly lower. The U.S. 10-year Treasury yield, a global bond yield benchmark, traded at 4.01%, down 1 basis point (1bp = 0.01 percentage points) from the previous trading day, while the 2-year Treasury yield was at 3.94%, also down 1bp.

International oil prices closed slightly lower due to a slowdown in crude oil demand growth and easing concerns over Middle East instability. West Texas Intermediate (WTI) crude fell $0.19 (0.3%) to $70.39 per barrel, and Brent crude, the global oil price benchmark, dropped $0.03 (less than 0.1%) to $74.22 per barrel.