US stock markets continued their upward trajectory on Friday, with the Dow Jones Industrial Average and S&P 500 reaching new record highs, lifted by robust corporate earnings and optimism ahead of the US elections. The S&P 500 and Dow each wrapped up their sixth straight week of gains, marking the longest winning streak of the year. Positive earnings results from major companies, particularly in the tech sector, helped offset mixed economic data, while investors remained confident about the market’s strength despite potential headwinds from the approaching election. The broader market mood was one of resilience, with gains also seen across European and Asian markets. 

Key Takeaways:

  • S&P 500 Hits Record High: The S&P 500 climbed 0.40% on Friday, closing at a record high of 5,864.67. This gain contributed to the index’s sixth consecutive week of positive performance, the longest such streak in 2024. Over the past week, the S&P 500 has advanced by 0.85%, reflecting increased investor confidence despite looming election uncertainties and mixed economic signals.
  • Dow Jones Extends Rally: The Dow Jones Industrial Average added 36.86 points, or 0.09%, to end at a new high of 43,275.91. The Dow notched a 0.96% increase over the week, achieving its longest winning streak this year with six straight weeks of gains. Market analysts attribute this momentum to positive corporate earnings and investor optimism surrounding upcoming US elections.
  • Nasdaq Surges as Netflix Jumps: The Nasdaq Composite rose 0.63% to close at 18,489.55, driven by a strong performance from Netflix, which surged 10% after exceeding Wall Street’s earnings and revenue expectations. This helped the Nasdaq post a 0.80% weekly gain, completing its sixth consecutive week of advances.
  • European Markets Record Second Straight Weekly Gain: The pan-European Stoxx 600 index edged up 0.21% on Friday, bringing its weekly gain to 0.4%. Strong performances from tech and luxury stocks helped drive the advance, with companies like LVMH, Hermès, and Kering benefiting from economic support measures in China. The FTSE 100 Index climbed 1.27% for the week to 8,358.25, lifted by better-than-expected retail sales data in the UK. Germany’s DAX added 0.38% on Friday, contributing to its second consecutive weekly gain, while France’s CAC 40 rose 0.4% to close at 7,613, supported by luxury stocks like Kering, which gained 3.5%.
  • Asian Markets Rise on Strong China Data, Mixed Economic Signals: Asian markets showed mixed results on Friday, with optimism fuelled by China’s stronger-than-expected GDP data. Mainland China’s CSI 300 surged 3.62%, as third-quarter GDP growth of 4.6% outpaced forecasts. Retail sales in China grew 3.2% year-on-year in September, while industrial output rose 5.4%, both beating expectations. However, concerns lingered as China’s housing market continued to struggle, with house prices falling 5.8% year-over-year in September. Hong Kong’s Hang Seng Index rallied 3.41%, benefiting from improved sentiment and policy support. In Japan, the Nikkei 225 added 0.18%, while headline inflation for September came in at 2.5%. Core CPI rose 2.4%, slightly above estimates. South Korea’s Kospi dipped 0.59% to end at 2,593.85, and Australia’s S&P/ASX 200 fell 0.87%, with investors weighing regional economic data and global market trends.
  • Oil Prices Post Weekly Losses Amid China Demand Concerns: Oil futures ended the week lower, pressured by concerns about China’s economic slowdown and mixed signals from the Middle East. Brent crude fell 1.77% on Friday, closing at $73.12 per barrel, while West Texas Intermediate (WTI) settled at $69.30, down 1.94%. Both benchmarks experienced their largest weekly declines since early September, with Brent down over 7% and WTI shedding more than 8%. Weaker-than-expected refinery output in China, coupled with worries over global demand, added to downward pressure on prices despite potential supply constraints in the Middle East.
  • US Treasury Yields Dip as Investors Digest Latest Data: US Treasury yields fell on Friday as investors evaluated the latest economic reports and their implications for Federal Reserve policy. The yield on the 10-year Treasury note dipped by 2 basis points to 4.079%, while the 2-year yield decreased by over 3 basis points to 3.953%. These declines followed a stronger-than-expected retail sales report, with sales rising 0.4% in September, beating forecasts of a 0.3% increase. 

FX Today:

  • EUR/USD Attempts Recovery as Greenback Softens: EUR/USD edged up on Friday, closing at 1.0864, breaking a four-day losing streak. The pair’s rebound was driven mainly by a broader market recovery in risk appetite, rather than strong European data. Despite this uptick, EUR/USD remains below key resistance levels, with the 50-period SMA at 1.0904 acting as immediate overhead resistance, followed by the 100-period SMA at 1.0987 and the 200-period SMA at 1.1043. If the pair manages to push above 1.0904, it could target the psychological level of 1.1000, but downside risks persist if it slips back toward support around 1.0800.
  • GBP/USD Struggles to Maintain Gains: GBP/USD closed the day at 1.3042, attempting to rebound from recent lows. The pair found support around the 1.3000 level, but resistance at the 50-period SMA, positioned at 1.3050, limited further upside movement. The 100-period SMA at 1.3150 and the 200-period SMA at 1.3173 present additional barriers. A break above the 50-period SMA could lead to a test of the 1.3100 mark, potentially setting the stage for further gains. However, failure to hold above 1.3000 could result in renewed selling pressure, with support seen at 1.2950.
  • USD/JPY Retreats Below 150.00 Amid Falling Yields: The USD/JPY pair retreated slightly on Friday, trading near 149.50 after touching a new monthly high above the 150.00 level earlier in the week. This pullback aligns with a decline in US Treasury yields, with the 10-year yield dipping to 4.079%. The pair faces immediate resistance near the 100-day moving average (DMA) around 150.84. Should buyers push beyond this zone, USD/JPY could test the next resistance level at 151.50, a critical area that could determine the pair’s next directional move. Conversely, a further dip below 148.84 could bring sellers back into play, potentially driving the pair toward the October 8 low of 147.35 and testing deeper support around 146.87.
  • Gold Soars to Record Highs Amid US Election Concerns: Gold prices continued their upward momentum, closing at a record high of $2,719 per ounce. The precious metal gained strength as uncertainty surrounding the US election and Middle East tensions drove investors toward safe-haven assets. Gold’s price remained above the 50-period SMA at $2,655 and the 100-period SMA at $2,654, signalling strong bullish sentiment. A break above the $2,720 resistance could open the door to further gains, with the next target at $2,740. On the downside, support is seen around $2,655, with a drop below this level potentially leading to a pullback toward $2,640. The overall trend remains firmly positive as long as prices stay above key moving averages.

Market Movers:

  • Netflix Soars on Strong Earnings Beat: Netflix shares surged 10% on Friday after the streaming giant reported third-quarter earnings that beat Wall Street’s expectations. Netflix also highlighted a 35% jump in ad-tier memberships from the previous quarter.
  • US Cellular Jumps on Spectrum Sale Deal: US Cellular shares rose 9% following the announcement of an agreement to sell part of its spectrum licenses to Verizon Communications for a total consideration of $1 billion. 
  • Lamb Weston Climbs on Activist Investor Interest: Shares of frozen French fry maker Lamb Weston jumped 9.2% after activist investor Jana Partners disclosed a new stake in the company. The regulatory filing from Jana Partners also indicated plans to push for strategic changes at Lamb Weston.
  • CVS Health Falls on CEO Change and Weak Guidance: CVS Health shares tumbled 8% on Friday after the company announced the replacement of longtime executive. Additionally, CVS issued a third-quarter earnings guidance of $1.05 to $1.10 per share, far below the FactSet consensus estimate of $1.69 per share.
  • MGP Ingredients Plummets on Earnings Warning: Shares of MGP Ingredients, a producer of distilled spirits, dropped 26% after issuing preliminary third-quarter earnings guidance that missed analysts’ expectations. 
  • Intuitive Surgical Rallies on Earnings Beat: Intuitive Surgical shares jumped 8.7% after the company, known for its robot-assisted surgical systems, reported third-quarter earnings that exceeded expectations. 
  • WD-40 Declines After Disappointing Earnings: WD-40 Company shares dropped 5% after reporting fiscal fourth-quarter earnings that fell short of market expectations. The company posted earnings of $1.23 per share, missing the FactSet consensus estimate of $1.34. The weaker-than-expected results, combined with a lacklustre full-year guidance, weighed on the stock.

As the week concluded, US stock markets maintained their upward momentum, with the S&P 500 and Dow Jones achieving record highs and extending their longest winning streak of 2024. Strong earnings from companies like Netflix and Intuitive Surgical helped offset mixed economic signals, including a decline in housing starts and a softer-than-expected Treasury yield environment. European markets also posted gains, supported by resilient luxury stocks, while Asian markets found relief in better-than-expected GDP data from China. Despite pressures on oil prices and concerns about the upcoming US election, investor optimism remained high, with many anticipating further market strength into November. However, uncertainties around global growth and monetary policy continue to loom, setting the stage for potential volatility in the weeks ahead.