Earnings Remain Strong as Policy and Trade Evolve

During the week, US markets were influenced by rising geopolitical tensions, fiscal uncertainty, and the initial progress of the corporate earnings season. However, the week closed with the main S&P and Nasdaq stock indices rising by 1.71% and 2.41%.

President Donald Trump toughened his rhetoric toward China, warning of a possible "trade war" and threatening to impose 100% tariffs on Chinese exports starting November 1. However, in a subsequent interview, he described these tariffs as "unsustainable" and announced that he would meet with President Xi Jinping in two weeks in South Korea, a comment that helped reverse the initial losses in stock futures. At the same time, the federal government shutdown, now in its third week, continues to cause concern among investors by delaying the release of key indicators and increasing fiscal uncertainty. On the economic front, the data released showed mixed signals. Small business optimism (NFIB) fell for the first time in three months, reflecting a deterioration in business sentiment. In the manufacturing sector, the Empire State index surprised on the upside and returned to positive territory, while the Philadelphia indicator fell to its lowest level in six months, evidencing an uneven slowdown across regions. In contrast, the real estate market showed a slight recovery: the NAHB index reached its best reading in six months, driven by lower mortgage rates and improved sales expectations.

READ MORE