Coca-Cola, 3M, and GM Exceed Q3 Earnings Expectations
"M7" Profits Expected to See Double-Digit Growth, Driven by AI Expansion
Netflix Earnings After Market Close; Tesla Results Coming on the 22nd
Gold Prices Drop Over 4% as Safe-Haven Demand Wea
The three major indices of the New York Stock Exchange showed mixed movements on October 21 (local time). Investors are awaiting inflation data to be released later this week, while digesting a series of solid corporate earnings. Gold prices are dropping sharply as expectations for easing U.S.-China trade tensions have weakened demand for safe-haven assets.
On the 20th (local time), a trader is working on the trading floor of the New York Stock Exchange (NYSE) in the United States. Photo by AFP Yonhap News
As of 11:55 a.m. on the New York Stock Exchange, the blue-chip Dow Jones Industrial Average was up 319.43 points (0.68%) at 47,026.01, compared to the previous session. The large-cap S&P 500 index rose 9.85 points (0.15%) to 6,744.98, while the tech-heavy Nasdaq index fell 3.565 points (0.02%) to 22,986.978.
By stock, Coca-Cola rose 3.64% after reporting third-quarter earnings that beat market expectations. 3M also showed strong performance, climbing 5.08% on robust earnings. General Motors (GM) surged 15.33% as its results exceeded expectations and it raised its annual earnings outlook. Notably, GM revised its projected tariff impact for this year down by 35%, from $4-5 billion to $3.5-4.5 billion, attracting strong buying interest. Apple, after climbing 3.94% to a record high the previous day, continued its upward trend with a 0.74% gain. Zions Bancorporation and Western Alliance, which had fueled concerns over regional bank loan defaults last week, rose 2.4% and 0.6%, respectively.
Corporate earnings at the start of the earnings season have been strong. According to financial information provider FactSet, about three-quarters of S&P 500 companies that have reported so far have posted results above market expectations. The profits of the so-called "Magnificent 7 (M7)" large technology companies are expected to increase by 14.9% year-on-year, driven by the growth of artificial intelligence (AI). This is nearly double the average earnings growth rate (6.7%) of the other 493 companies.
Anthony Saglimbene, chief market strategist at Ameriprise Financial, said, "If the M7 meets profit growth expectations, the market will rise again," adding, "Recently, investors have started to bet on large tech stocks again ahead of major earnings reports next week." He also noted, "Given the high expectations and valuations, the performance of large tech stocks could influence the overall market direction through the end of the year."
Investors are closely watching Netflix's earnings, which will be released after the market closes today, and Tesla's earnings, which are scheduled to be announced on October 22.
The possibility of an additional rate cut by the Federal Reserve this month is also supporting investor sentiment. The Fed lowered its benchmark interest rate to 4.0-4.25% last month and will decide on an additional cut at the Federal Open Market Committee (FOMC) meeting scheduled for October 28-29. According to the Chicago Mercantile Exchange (CME) FedWatch, as of today, there is a 98.9% probability that the Fed will cut rates by an additional 0.25 percentage points in October.
The September Consumer Price Index (CPI), which the Fed will reference for its rate decision, will be released on October 24. Last month's CPI is expected to have risen 3.1% year-on-year, a slightly larger increase than August's 2.9%.
Expectations that U.S.-China trade tensions will ease with the summit between the two countries scheduled for next week are also supporting investor sentiment. As the possibility of a U.S.-China trade agreement is anticipated, demand for safe-haven assets has weakened and gold prices have plunged. On the New York Mercantile Exchange, gold futures were down 4.67% from the previous day at $4,155.6 per ounce as of 11:45 a.m.
U.S. Treasury yields were little changed. The yield on the 10-year Treasury note fell 2 basis points (1bp = 0.01 percentage point) from the previous session to 3.96%, while the yield on the 2-year Treasury note was unchanged at around 3.45%.
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