Optimism Over Q3 Earnings and Fed Rate Cut
White House: "Shutdown Likely to End This Week"
Netflix, Tesla Earnings and CPI Data Due This Week
All three major indices of the New York Stock Exchange in the United States rose simultaneously on the 20th (local time). Investor sentiment is improving, driven by expectations for strong corporate earnings and the White House indicating the possibility of resolving the U.S. federal government shutdown within this week.
On the 17th (local time), a trader was working on the trading floor of the New York Stock Exchange (NYSE) in the United States. Photo by Reuters Yonhap News
As of 10:22 a.m. on the New York Stock Exchange, the blue-chip Dow Jones Industrial Average was up 274.12 points (0.59%) from the previous trading day, standing at 46,464.73. The large-cap S&P 500 Index rose 52.75 points (0.79%) to 6,716.76, while the tech-heavy Nasdaq Index jumped 241.952 points (1.07%) to 22,921.927.
Last week, the stock market experienced extreme volatility. This was due to renewed concerns over U.S.-China trade tensions and the possibility of regional bank failures, which heightened investor caution. However, as the third-quarter earnings season gets underway and the possibility of a Federal Reserve rate cut becomes more prominent, investor sentiment is recovering rapidly.
According to Bank of America, 58 companies listed on the S&P 500 have reported earnings so far, with 76% beating market expectations. This is an improvement compared to the second quarter, when the figure was 73%.
John Stoltzfus, Managing Director and Chief Investment Strategist at Oppenheimer Asset Management, commented, "As earnings reports begin, the results look promising," adding, "The fact that large U.S. companies are exceeding both expectations and earnings forecasts despite ongoing risks shows that there is enough resilience for stock prices to continue their upward trend."
Investor attention is now focused on major corporate earnings announcements scheduled for this week. Netflix, Coca-Cola, Tesla, and Intel are among the companies set to release their earnings. Despite concerns over President Donald Trump's aggressive tariff policies, a resulting slowdown in the labor market, and rising inflation, expectations are growing that companies will continue to post strong results.
The White House's suggestion that the shutdown, which has continued for three weeks since the 1st, could soon end is also having a positive effect on investor sentiment. Kevin Hassett, Chairman of the White House National Economic Council, said in a CNBC interview that Senate Democratic Leader Chuck Schumer was responsible for the shutdown, stating, "The Schumer shutdown is likely to end this week." He added, "Moderate Democratic lawmakers will step up to reopen the government, and at that point, negotiations on the policies they want can proceed through normal procedures. If that does not happen, the White House, together with Russell Vought, Director of the Office of Management and Budget, will have to closely consider even stronger measures to bring Democrats to the negotiating table."
Whether U.S.-China trade tensions will ease is also drawing investor attention. President Trump, speaking to reporters aboard Air Force One en route from Florida to Washington, D.C., demanded three things from China: lifting export controls on rare earths, banning the distribution of fentanyl, and resuming soybean imports. However, in a Fox News interview aired the same day, he said regarding a summit with Chinese President Xi Jinping, "We will meet, and a separate meeting has been scheduled," reaffirming that the U.S.-China summit will be held as planned during the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea, at the end of this month.
The major economic indicator to be released this week is the September Consumer Price Index (CPI). Originally scheduled for release on the 15th, the CPI has been postponed to the 24th due to the government shutdown. According to market expectations, last month's CPI is forecast to rise 3.1% year-on-year, up from 2.9% in August. Ahead of the Federal Open Market Committee (FOMC) regular meeting on the 28th and 29th, the Federal Reserve is expected to closely review labor market and inflation trends and reflect them in its decision on the benchmark interest rate.
U.S. Treasury yields are holding steady. The yield on the 10-year Treasury note fell 1 basis point (1bp=0.01 percentage point) from the previous session to 3.99%, while the yield on the 2-year Treasury note remains at 3.46%.
By stock, Apple is up 2.49% on strong iPhone 17 sales. Amazon is up 0.83% following the outage and recovery of its cloud service, Amazon Web Services. Nvidia is up 0.63%, while Oracle is down 2.83%.
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