FX.co ★ Q3 Brings Records: Morgan Stanley on Fire, Amazon Makes Surprise Deals

Dow Jones Is Back on Track: Wall Street Ends with Records

The Dow Jones Industrial Average surprised markets on Wednesday, hitting a new all-time high despite pressure from tech stocks. Financials and small caps offset the decline in tech, leading to a positive outcome for all major Wall Street indexes.

Third Record in Four Sessions

This is the third time in the last four trading sessions that the Dow has performed better, closing comfortably above 43,000. Thus, the index has completely recovered its losses from the previous day, once again proving its resilience.

S&P 500: Near a Record

The S&P 500 was also close to setting a new record. However, despite positive dynamics during the day, it ended trading slightly behind, adding 27.21 points (0.47%) and stopping at 5,842.47.

Nasdaq Remains in the Green

The tech-heavy Nasdaq Composite also showed a positive result, ending the day up 51.49 points (0.28%) and reaching 18,367.08. Despite pressure from the large tech companies, the index remained in the green.

Financials Lead the Day

The overall positive mood of the day was dictated by the active growth of financial companies, which became the main drivers of market growth.

"Investors have started to move capital from the tech sector to financial companies," said Michael Kantrowitz, chief investment strategist at Piper Sandler. In his opinion, such a reshuffle looks logical, since current rates favor bank earnings, while optimism around artificial intelligence is already priced into high tech companies.

Thus, Wall Street ended the day in the green zone, confirming investor optimism and the resilience of the financial sector in the current market situation.

Morgan Stanley on the Rise: Banking in Focus

Morgan Stanley shares posted impressive gains, closing at record highs, up 6.5%. The surge came as the company posted strong financial results that pointed to strong investment banking revenues. The company joined other giants like JPMorgan Chase, which also reported strong profits.

Regional Banks Not Lagging Behind

Large regional banks, while less reliant on investment banking, also posted solid results. First Horizon jumped 4.1% and U.S. Bancorp advanced 4.7%, reflecting positive third-quarter results.

The broad bank index rose 1.2%, while the regional bank index gained 1.5%, highlighting the overall optimism in the sector.

Shifting Focus: Small Caps in Focus

Investors are shifting capital toward less expensive small-caps as interest in tech giants fades. This has led to a notable rise in indices tracking smaller companies.

The Russell 2000 jumped 1.6%, while the S&P Small Cap 600 gained 1.4%, posting their best performance since November 2021.

Tech Under Pressure

There was negative momentum among the largest tech companies. Apple shares fell 0.9% after hitting a record high in the previous session. Alphabet, Meta, and Microsoft were also under pressure, falling between 0.2% and 1.6%.

Nvidia Pulls Ahead

Despite the overall decline in the tech sector, Nvidia was able to hold its own, gaining 3.1% after an earlier decline of almost 5%. The company remains a key player in the chip sector, continuing to attract investor attention.

Wall Street thus ended the day in a mixed bag, with financials and small caps rallying while tech giants struggled in the short term.

Tech Sector Loosens Grip as Investors Look for New Opportunities

The Magnificent Seven have long been the driving force behind Wall Street's record gains this year. However, lofty valuations and growing optimism about the economy have prompted investors to look elsewhere for new growth opportunities.

Financials, Utilities, Industrials Set Records

Four of the 11 sectors in the S&P 500 ended the day with new records, including financials, utilities, materials, and industrials. Utilities was particularly notable, leading the gains, up 2%.

Dominion Energy stood out after an agreement with Amazon to develop nuclear technology to power data centers, sending its shares up 5.1%. That was one of the main reasons for the sector's gains.

Transportation Gains Momentum

The economically sensitive Transportation Index also showed strong gains, up 1.9%. United Airlines led the way, posting its best performance in six months, up 12.4%. That came after the company reported better-than-expected fourth-quarter profit guidance and announced a $1.5 billion share buyback program.

Delta Air Lines and American Airlines also posted notable gains, up 6.8% and 7.1%, respectively, boosting the transportation sector.

New data and earnings on the horizon

Market participants now turn their attention to the upcoming earnings reports due this week. Key economic data, including retail sales and industrial production figures for September, are expected on Thursday. They could provide insight into current economic trends and influence the future direction of markets.

As such, the market continues to expand beyond the technology sector, opening up new opportunities for investors seeking a balance between high yields and new opportunities.

US trading: Activity slows, but gains continue

US trading volume on Wednesday was 10.63 billion shares, below the average of 12.13 billion over the past 20 trading days. However, despite the decline in volume, key indexes showed steady gains, thanks to strong results in economically sensitive sectors.

Tech giants' growth slows

Tech giants' stocks showed weakness, limiting the Nasdaq's gains. Against this backdrop, other sectors became the engines of growth for the S&P 500 and Dow Jones. The latter closed at record levels for the third time in the last four days.

Banking sector pleases investors

Financial companies continue to surprise the market with optimistic reports. Morgan Stanley reported quarterly profit that exceeded analysts' expectations, which caused a significant rise in its shares. This result reinforced the positive mood in the banking sector.

Airlines on the rise

United Airlines' earnings also pleased investors: the company's shares soared by 6.5%, which affected the entire commercial airline sector. This rise was one of the significant events of the day, reflecting the positive mood in the transport sector.

Gloomy forecasts in the tech sector

However, not all the news was so optimistic. Chip-equipment maker ASML has issued a weaker sales forecast for 2025, raising concerns about demand in the tech market. Concerns about the future growth of the AI sector and tech in general are starting to gain momentum.

"While earnings season is still early, the results look impressive and we expect strong numbers from other sectors," said analyst Detrick. "However, ASML's guidance has raised concerns about the outlook for AI and the tech sector in general. It's now up to companies to prove that their growth is justified and on solid ground."

Europe under pressure and uncertainty

Meanwhile, European markets have fallen after the disappointing news from ASML. In addition, sentiment has been weighed down by shares of luxury goods maker LVMH, adding to the cautious mood. All eyes are on the European Central Bank, which is set to make a major policy decision on Thursday.

The current market environment remains challenging, with US indices supported by strong corporate earnings, but global markets facing concerns over technology and potential economic developments in Europe.

Global markets mixed

The MSCI index, which tracks stocks around the world, showed a slight increase, adding 0.09% to 851.98 points. Meanwhile, European markets showed the opposite picture, with the STOXX 600 down 0.19% and the FTSEurofirst 300 losing 0.21% to end 4.37 points lower.

Emerging Markets Slip

Emerging market stocks also came under pressure, with the MSCI Emerging Markets Index down 0.53%, or 6.09 points, to 1,143.64. The result continued a series of swings amid global uncertainty over interest rates and the economic outlook.

Treasury yields fall

U.S. Treasury yields continued to fall as market participants increasingly believe the Federal Reserve will not cut interest rates significantly at its upcoming meeting. The yield on the 10-year note fell 2.2 basis points to 4.014%, while the 30-year note lost 3 basis points to 4.2983%. The yield on the 2-year note, which is more sensitive to rate expectations, also fell 2.1 basis points to 3.936%.

Dollar Gains on Fed Expectations, Political Uncertainty

The dollar hit a 10-week high in currency markets as investors grew increasingly confident that the Fed will not cut rates significantly and began to factor in a possible victory by Donald Trump in the upcoming US presidential election. The dollar index, which tracks the dollar against a basket of major currencies, rose 0.28% to 103.55. Against this backdrop, the euro weakened 0.29% to $1.0858.

Global markets were thus mixed as investors continued to assess the outlook for interest rates and political uncertainty.

Dollar Strengthens Against Yen: FX Market in Focus

The US dollar continued to strengthen against the Japanese yen, rising 0.34% to 149.69. The gains underscore investor confidence in the dollar's resilience amid expectations of further action by the Federal Reserve.

Oil Prices Under Pressure: Declines Continue

Oil prices are showing a slight decline, extending a slide that began three days ago as concerns over supply disruptions due to the conflict in the Middle East ease. These concerns, which had previously supported prices, are starting to fade. Also, disappointing oil demand forecasts for 2025 have added to the pressure on the market.

The cost of US WTI crude oil fell 0.27% to $70.39 per barrel. At the same time, Brent crude oil fell to $74.22 per barrel, which represents a slight decline of 0.04% on the day.

Gold Continues to Rise as Bond Yields Weaken

Gold prices continued their climb, helped by a decline in US Treasury yields. Investors worried about potential volatility in the markets continue to seek refuge in gold.

The spot price of gold rose by 0.49%, reaching $2,674.10 per ounce, reflecting the current sentiment in the precious metals market.

Thus, currency and commodity markets continue to react to global economic and political developments. The dollar is strengthening, oil remains under pressure, and gold is steadily rising amid uncertainty and falling bond yields.