US markets rallied on Wednesday, with the Dow Jones Industrial Average reaching a new record high, driven by strong corporate earnings reports. Major players like Morgan Stanley and United Airlines fuelled optimism, helping the broader market overcome recent volatility. The S&P 500 and Nasdaq also edged higher, as robust third-quarter earnings offset concerns about economic headwinds. With a strong start to the earnings season and investor sentiment improving, markets showed resilience despite lingering caution about future pullbacks.

Key Takeaways:

  • Dow Hits Record Close: The Dow Jones Industrial Average surged 337.28 points, or 0.79%, to close at a new record of 43,077.70, recovering from Tuesday’s sell-off. Strong corporate earnings reports and positive market sentiment drove the blue-chip index to its highest-ever close, boosting confidence among investors.
  • S&P 500 and Nasdaq Climb as Earnings Season Begins: Both the S&P 500 and the Nasdaq posted gains on Wednesday, with the S&P 500 rising 0.47% to 5,842.47 and the Nasdaq Composite edging up 0.28% to close at 18,367.08. Approximately 79% of the 50 S&P 500 companies that have reported their third-quarter earnings so far have exceeded Wall Street expectations, fuelling optimism across the markets. 
  • European Markets Mixed as Inflation Eases and Luxury Stocks Slump: European stocks saw a mixed day of trading, with the FTSE 100 climbing 0.97% to 8,329.07, supported by a sharp drop in UK inflation to 1.7% in September—the lowest in over three years. The decline in inflation raised expectations of a rate cut by the Bank of England. However, the CAC 40 fell 0.4% to 7,492, weighed down by a 3.7% drop in LVMH shares after the luxury goods company reported a 3% decline in third-quarter sales, marking one of the steepest falls among major European stocks.
  • Asian Markets Decline as Japan’s Nikkei Leads Losses: Asian markets closed mostly lower on Wednesday, with Japan’s Nikkei 225 leading the declines, falling 1.83% to 39,180.30. South Korea’s Kospi dropped 0.88% to 2,610.36, while the small-cap Kosdaq fell 1.04%. Taiwan’s Weighted Index lost 1.21% to 23,010.98, dragged down by weakness in the tech sector. In China, the CSI 300 slipped 0.63% to close at 3,831.59, while Hong Kong’s Hang Seng Index was flat, lifted by gains in real estate stocks as investors awaited new stimulus measures for China’s struggling property market. Australia’s S&P/ASX 200 also dropped 0.41% to 8,284.70.
  • Oil Prices Steady as US Crude Falls: US crude oil futures slipped 0.27% to settle at $70.39 per barrel, marking the second consecutive day of losses. Brent crude also dipped, closing at $74.22 per barrel, down 0.04%. The declines came as concerns over potential oil supply disruptions in the Middle East eased after Israel indicated it would limit its retaliatory strikes to military targets in Iran. Despite the pullback, oil prices remain volatile as broader concerns over global demand persist.
  • Bitcoin Rallies over $68,000, Sparking Crypto Surge: Bitcoin surged to $68,400 on Wednesday, marking its highest level since July and capping a 9% gain over the past week. The rally also lifted other cryptocurrencies, with Ether rising 7% and Solana up nearly 10%. Crypto-related stocks benefited from the surge, with Coinbase climbing 7% and Bitcoin miners Marathon Digital and Riot Platforms both seeing strong gains. The year-to-date rise of 53% in Bitcoin’s value is attributed in part to new spot Bitcoin exchange-traded funds, which have attracted a wave of new investors.

FX Today:

  • EUR/USD Drops Amid Persistent Dollar Strength: EUR/USD remained under pressure on Wednesday, ending the session near 1.0857 as the pair tested key support at 1.0850. The Euro continued to weaken against the US Dollar, reflecting ongoing concerns about the eurozone’s economic outlook and the strength of the USD. The pair traded below all major moving averages, with immediate resistance at the 50-period SMA at 1.0935 and the 100-period SMA at 1.1025, reinforcing the bearish trend. Further declines could see the pair test lower support levels at 1.0800, with the downtrend expected to persist unless a significant recovery breaks above the 50-period SMA.
  • GBP/USD Slips as Selling Pressure Builds: GBP/USD closed the session at 1.2982, falling below the psychological 1.3000 mark as bearish momentum strengthened. The pair was weighed down by USD strength and concerns over the UK’s economic outlook, with immediate resistance at the 50-period SMA at 1.3071. The 100-period and 200-period SMAs at 1.3193 and 1.3180, respectively, further limited recovery attempts. If the pair fails to reclaim the 1.3000 level soon, it could face additional declines, with support seen at 1.2900 and 1.2850. The outlook remains bearish unless GBP/USD can stage a sustained move above 1.3071.
  • USD/CHF Holds Strong, Testing Key Resistance: USD/CHF extended its recovery, closing around 0.8653 as the pair tested resistance at the 200-period SMA near 0.8700. The 50-period SMA at 0.8589 provided strong support, while the 100-period SMA at 0.8531 acted as an additional buffer on the downside. Although the overall trend remains bearish, recent price action suggests a potential shift in sentiment as the pair continues to regain ground. A successful break above the 200-period SMA could signal a more sustained bullish reversal, while failure to do so may see the pair retesting support around 0.8600.
  • AUD/USD Extends Losses as Downward Momentum Persists: AUD/USD ended Wednesday’s session at 0.6665, continuing its bearish trajectory as the pair struggled to recover above key resistance levels. The 50-period SMA at 0.6732 capped any potential upside, while the 100-period and 200-period SMAs, at 0.6805 and 0.6771 respectively, further reinforced the downtrend. Support at 0.6660 was tested, and a break below this level could push AUD/USD toward 0.6600 or lower. The bearish sentiment remains intact, with the pair likely to continue declining unless it can break above the 50-period SMA at 0.6732.
  • Gold Fails to Break Resistance as Bullish Momentum Wanes: Gold prices edged up during Wednesday’s session, closing at $2,674 per ounce, but struggled to overcome strong resistance near $2,680. The metal found support around the 50-period SMA at $2,643, preventing a steeper decline, while the broader uptrend slowed. The outlook remains cautiously bullish as long as prices hold above the 200-period SMA at $2,595. However, failure to break through the $2,680 resistance level suggests consolidation or a potential pullback toward $2,620. A sustained move above $2,680 could drive Gold price higher, with the next major target at $2,700.

Market Movers:

  • Novavax Plunges After Clinical Hold: Novavax shares tumbled more than 19% after the US Food and Drug Administration put a clinical hold on its combination Covid-19 and flu shot, as well as its stand-alone flu vaccine. The unexpected regulatory setback caused a sharp selloff, making Novavax one of the biggest decliners in the market.
  • United Airlines Soars on Earnings and Buyback Plan: United Airlines stock skyrocketed 12.4% after posting better-than-expected third-quarter earnings and announcing its first share buyback plan since before the pandemic, valued at $1.5 billion. The strong results and positive outlook for the fourth quarter lifted investor confidence.
  • Morgan Stanley Surges on Earnings Beat: Morgan Stanley climbed 6.5% following a robust quarterly report that beat analysts’ expectations. The bank reported earnings of $1.88 per share, higher than the expected $1.58, and revenue of $15.38 billion, exceeding the forecasted $14.41 billion. Gains in its wealth management, trading, and investment banking units drove the strong performance.
  • Cisco Systems Hits 52-Week High on Upgrade: Cisco Systems rose over 4%, reaching a 52-week high, after Citi upgraded the stock to “buy” from “neutral.” Citi highlighted Cisco’s potential to expand its AI business, which could drive long-term growth, pushing the stock higher.
  • ASML Sinks on Lower Sales Outlook: ASML, a major semiconductor equipment maker, saw its shares drop more than 6% as it slashed its sales outlook for 2025. The announcement followed a 16% decline the previous day after the company mistakenly released its third-quarter earnings report ahead of schedule, unsettling investors.
  • Aspen Aerogels Jumps on DOE Loan Announcement: Aspen Aerogels surged more than 13% after the company revealed it had secured a conditional commitment for a $670.6 million loan from the US Department of Energy. The announcement of stronger-than-expected preliminary third-quarter results also contributed to the stock’s significant rise.
  • Prologis Rises on Strong Quarterly Results: Prologis shares climbed 4.6% after the warehouse giant reported core funds from operations of $1.43 per share, beating the $1.37 estimate from FactSet. The company’s CEO noted that long-term demand for industrial real estate remains robust, further boosting investor sentiment.
  • US Bancorp Gains on Earnings Beat: US Bancorp saw its stock rise 4.7% after posting third-quarter earnings of $1.03 per share, topping expectations of 99 cents. However, revenue slightly missed estimates, coming in at $6.86 billion compared to the $6.9 billion forecast, but investors responded positively to the earnings beat.

As the day’s trading came to a close, US markets posted strong gains, driven by upbeat earnings reports and positive investor sentiment. The Dow Jones reached a record high, while both the S&P 500 and Nasdaq saw moderate gains, lifted by standout performances from companies like Morgan Stanley and United Airlines. Despite concerns about inflation and potential pullbacks, solid third-quarter results have bolstered market confidence, with 79% of reporting S&P 500 companies beating expectations. Meanwhile, European and Asian markets faced mixed results, with the Nikkei leading regional declines and European luxury stocks under pressure. As earnings season continues, investors are watching for further signs of economic resilience.