Delta Air Lines Soars 6.9% on Strong Q3 Earnings; Costco Also Rises
Market Rally Hinges on Q3 Earnings Results
Fed Officials in Focus with Series of Remarks; Powell Offers No Guidance on Rate Path
The three major indices on the New York Stock Exchange were mixed in early trading on October 9 (local time), hovering around the flat line. After artificial intelligence (AI) optimism reignited the previous day, pushing the S&P 500 and Nasdaq indices to record highs, the market appears to be taking a breather as it digests corporate earnings.
As of 9:48 a.m. on the New York Stock Exchange, the blue-chip Dow Jones Industrial Average was up 33.13 points (0.07%) at 46,634.91. The large-cap S&P 500 index was down 3.44 points (0.05%) at 6,750.28, while the tech-heavy Nasdaq index was down 45.269 points (0.2%) at 22,998.109.
By stock, Delta Air Lines jumped 6.86% after reporting third-quarter revenue and profit that exceeded market expectations. Major U.S. retailer Costco rose 2.19% after posting solid sales in September. Nvidia climbed 2.53% on news that the U.S. government had approved billions of dollars worth of semiconductor exports to the United Arab Emirates (UAE). In contrast, Tesla fell 1.81% after it was reported that U.S. auto safety regulators had launched an investigation into accidents related to its autonomous driving software.
The previous day's market rally was driven by AI optimism sparked by comments from Nvidia CEO Jensen Huang, which outweighed concerns about a potential bubble. CEO Huang stated, "Computing demand has increased significantly over the past six months." In addition, expectations for further rate cuts by the Federal Reserve boosted investor sentiment.
Market participants are focusing on third-quarter corporate earnings announcements. Major financial companies such as Goldman Sachs and Citigroup are scheduled to report earnings next week, while Tesla, one of the 'Magnificent 7,' will be the first to release its third-quarter results on the 22nd. Google parent company Alphabet, Microsoft, and Meta are set to announce their earnings on the 29th. Depending on the results from these large technology companies, the market will assess whether the AI investment boom is overheating or is based on substantial growth.
Aidan Yao, a strategist at Amundi Investment Institute, analyzed, "Expectations are skewed, and valuations have risen, so investors are focusing on earnings," adding, "Investors want to confirm whether earnings are truly catching up with valuations."
The U.S. federal government shutdown (temporary work stoppage) has continued for nine days as of October 9. With the shutdown delaying the release of key economic indicators, investors paid close attention to Federal Reserve Chair Jerome Powell's speech at the Community Bank Conference scheduled for that morning. However, Chair Powell did not provide any clues about the future path of interest rates. In addition, public remarks from Fed Vice Chair Michelle Bowman, Fed Vice Chair Michael Barr, and San Francisco Federal Reserve Bank President Mary Daly are expected later in the day.
These public statements from Fed officials come just one day after the release of the September Federal Open Market Committee (FOMC) minutes. According to the minutes, of the 19 Fed members, 10 anticipated two additional rate cuts within the year, while one expected one or fewer cuts. As a result, significant debate is expected within the Fed during the upcoming interest rate decision process.
U.S. Treasury yields remained steady. The benchmark 10-year yield, a global bond market indicator, stood at 4.15%, while the 2-year yield, which is sensitive to monetary policy, was at 3.59%, both up 1 basis point (1bp = 0.01 percentage point) from the previous day.
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