US markets closed the week on a positive note, with both the Dow Jones Industrial Average and the S&P 500 reaching new heights. Investors were encouraged by strong third-quarter earnings from major financial institutions, while easing inflation concerns contributed to an overall sense of market optimism. Although tech giant Tesla saw a notable drop following a disappointing event, broader market gains helped offset the decline. European markets also ended the week higher, adding to the positive momentum, despite mixed results from Asia.

Key Takeaways:

  • Dow Jumps 400 Points to a New Record: The Dow Jones Industrial Average surged 409.74 points, or nearly 1%, to close at a new record high of 42,863.86. This gain marked the fifth consecutive week of increases for the Dow, which rose 1.2% over the week. The rally was driven by strong earnings in the banking sector and optimism about a resilient economy.
  • S&P 500 Breaks Above 5,800 for the First Time: The S&P 500 gained 0.6% on Friday, closing at 5,815.03, its first-ever close above the 5,800 mark. This is a milestone for the broad index, which has posted five consecutive weekly gains, adding 1.1% this week alone. The index continues to be buoyed by strong corporate earnings and easing concerns over inflation.
  • Nasdaq Holds Steady Near Record Highs: The Nasdaq Composite edged higher by 0.3%, closing at 18,342.94, leaving it less than 2% below its all-time high. The tech-heavy index posted a 1.1% weekly gain, continuing its recent streak of advances, as investors remain optimistic about growth in the technology sector.
  • European Markets Close Higher After Choppy Week: European markets rebounded late on Friday, with the pan-European Stoxx 600 closing 0.53% higher, helping it end the week with modest gains. Germany’s DAX rose by 141 points, or 0.73%, while France’s CAC 40 gained 38 points, or 0.50%, reflecting renewed confidence in Europe’s economic resilience. Meanwhile, the UK’s FTSE 100 struggled, ending the week down 0.33% at 8,253.65, despite a 0.2% GDP growth in August that offered some relief after months of stagnation.
  • Asian Markets Mixed Amid Economic Concerns: Asia-Pacific markets saw mixed results as investors digested key economic data and ongoing concerns about China’s economic slowdown. Mainland China’s CSI 300 index fell 2.77% on Friday, settling at 3,887.17, ending the week down 3.25% as stimulus-fuelled optimism continued to fade. Japan’s Nikkei 225 gained 0.57% to finish at 39,605.8, driven by strength in financials and healthcare, while the Topix fell 0.24% to close at 2,706.2. South Korea’s Kospi dipped slightly by 0.07% to close at 2,596.91, while Australia’s S&P/ASX 200 slipped 0.1% to end at 8,214.5.
  • Oil Prices Retreat After Recent Rally: Oil prices experienced a slight pullback on Friday, with West Texas Intermediate (WTI) crude closing at $75.56 per barrel, down 0.38%, while Brent crude fell 0.45% to settle at $79.04 per barrel. Despite the drop, both benchmarks posted their second consecutive weekly gains, with WTI up over 5% and Brent more than 2% year-to-date. 
  • Producer Prices Steady in September as Inflation Eases: The US producer price index (PPI), which measures the prices businesses receive for their goods and services, remained flat in September, offering reassurance that inflation is cooling. The PPI was unchanged month-over-month and up 1.8% year-over-year, slightly below expectations for a 0.1% monthly increase. Excluding food and energy, core PPI rose by 0.2%, in line with forecasts. This data, along with recent consumer price index (CPI) figures, suggests inflation may be easing, helping to temper fears of more aggressive monetary policy from the Federal Reserve.
  • Treasury Yields Dip Slightly After Inflation Data: The yield on the 10-year US Treasury dipped less than a basis point to 4.088% on Friday, after a week of volatility that saw yields briefly rise above 4.1%. The 2-year yield fell 5 basis points to 3.949%. The soft September PPI report contributed to easing concerns over inflation, as markets continue to monitor economic data for signs of the Federal Reserve’s next move.

FX Today:

  • EUR/USD Holds Firm After US Inflation Data: The EUR/USD pair remained steady on Friday, closing at 1.0935 after testing support around 1.0950. The pair struggled to break above key resistance at the 50-period SMA of 1.0987, which continues to act as a ceiling for any upward movement. The 100-period and 200-period SMAs, currently at 1.1069 and 1.1075, also loom overhead, reinforcing a range-bound outlook. A move below 1.0930 could open the door for further declines toward the 1.0900 level, while a break above 1.0986 may lead to a test of 1.1000 and beyond.
  • GBP/USD Finds Support Above 1.3060: The GBP/USD pair traded around 1.3066 on Friday, testing key support at the 1.3050 level. The 50-period SMA at 1.3126 continues to act as resistance, capping any significant upward moves. Meanwhile, the price found support near the 200-period SMA at 1.3197, offering some near-term stability. A break below 1.3050 could trigger a bearish move toward 1.2950, while a recovery above the 50-period SMA may see the pair retest the 1.3150 level.
  • USD/CHF Bounces from Lows: The USD/CHF pair showed signs of recovery, trading at 0.8572 after finding support near 0.8546. The 100-period SMA at 0.8506 provided a solid base, while the price remained above the 50-period SMA at 0.8543, signalling short-term bullish momentum. However, further upside will be tested at 0.8600, a key resistance level. A break above 0.8600 could lead the pair toward 0.8650, while a dip below 0.8540 may prompt further losses toward the 0.8500 zone.
  • USD/JPY Consolidates Within Range: The USD/JPY pair edged higher on Friday, closing at 149.13, up 0.37%, as US Treasury yields remained elevated. The pair traded within a range of 148.00 to 149.50, as traders assessed the latest US inflation data and anticipated the Federal Reserve’s next move. The 200-period and 100-period SMAs around 151.20/21 continue to act as long-term resistance. A break above 149.50 could push the pair toward the psychological level of 150.00, while a move below 148.00 may signal a shift toward further downside risks.
  • Gold Climbs Amid Softer Inflation Data: Gold prices rallied on Friday, closing at $2,655.84 after hitting an intraday high of $2,659.55. The precious metal benefitted from easing inflation concerns, as US producer price data indicated steady prices in September. Gold remains above its 50-period SMA at $2,641.71, while the 100-period SMA at $2,640.42 and 200-period SMA at $2,583.00 offer additional support. A move above $2,660 could see the metal retest the $2,675 level, with further upside potential toward $2,700. On the downside, a decline below $2,640 may signal a test of the $2,600 level.

Market Movers:

  • Tesla Plummets on Robotaxi Disappointment: Tesla shares tumbled 8.8% after its robotaxi event underwhelmed investors. Morgan Stanley analysts noted that the event lacked details on how Tesla would compete against ride-sharing giants like Uber and Lyft. In contrast, shares of Lyft surged more than 9%, and Uber gained nearly 11% following the event.
  • Wells Fargo Rallies on Strong Earnings: Wells Fargo stock climbed 5.6% after the bank reported better-than-expected third-quarter earnings. Adjusted earnings came in at $1.52 per share, topping analysts’ expectations of $1.28 per share. However, revenue slightly missed, coming in at $20.37 billion, below the $20.42 billion consensus estimate.
  • JPMorgan Chase Gains on Earnings Beat: JPMorgan Chase shares rose 4.4% after the largest US bank reported third-quarter results that exceeded profit and revenue estimates. Although profit fell by 2% year-over-year, the bank’s revenue climbed 6%, driven by higher-than-expected interest income.
  • Symbotic Soars on New Deal with Walmart: Shares of Symbotic jumped 8.8%, building on the previous session’s 18% surge after the robotics technology company announced a deal with Walmart de México y Centroamérica (Walmex) to deploy warehouse automation systems in two locations.
  • Fastenal Advances on Strong Quarterly Results: Fastenal stock surged nearly 10% after the company beat third-quarter earnings expectations, posting 52 cents per share on $1.91 billion in revenue. Analysts had expected earnings of 51 cents per share on $1.90 billion in revenue.
  • Affirm Jumps 12% on Wells Fargo Upgrade: Shares of Affirm surged 12% after Wells Fargo upgraded the stock to overweight from equal weight. The investment firm cited growing profitability and Affirm’s partnership with Apple Pay as key drivers for the upgrade.
  • Bank of America Climbs Despite Berkshire Sale: Bank of America shares rose 5% even after Warren Buffett’s Berkshire Hathaway cut its stake in the bank to below 10%, selling more than 9.5 million shares. The stake now stands at 9.987%, according to an SEC filing.
  • BlackRock Climbs on Strong Earnings: BlackRock shares rose 3.4% after the asset manager reported better-than-expected third-quarter earnings, posting $11.46 per share on $5.20 billion in revenue, beating analysts’ expectations of $10.33 per share on $5.01 billion in revenue.
  • BNY Mellon Falls Despite Earnings Beat: Bank of New York Mellon shares slipped 0.4%, despite reporting better-than-expected quarterly results. The bank posted adjusted earnings of $1.52 per share on $4.65 billion in revenue, exceeding expectations of $1.42 per share on $4.54 billion in revenue.

As the week drew to a close, US markets finished on a high, with the Dow surging over 400 points to a record close and the S&P 500 breaking above 5,800 for the first time, fuelled by strong earnings from major banks like JPMorgan Chase and Wells Fargo. Despite some disappointment from Tesla’s robotaxi event, the tech-heavy Nasdaq still managed to post gains, reflecting a broad market rally. In Europe, markets ended higher, while Asian markets faced a mixed session with China’s CSI 300 down sharply. Oil prices saw a slight pullback, though both WTI and Brent posted their second consecutive weekly gains, while gold climbed above $2,650 as inflation data showed signs of easing, capping off a week of strong market performance despite underlying global uncertainties.