Key Takeaways
- Major US stock indices showed mixed performance, with the Dow Jones Industrials reaching a 1.5-week high, driven by positive corporate news from companies like General Motors and RTX Corp.
- Precious metals, particularly gold and silver, experienced significant declines, reacting to a stronger market sentiment amidst ongoing US-China trade talks and the lingering government shutdown.
- The Q3 earnings season is a key focus for the markets, with a high percentage of S&P 500 companies beating forecasts, although overall profit growth is expected to slow.
- The US government shutdown continues to impact economic data releases and market sentiment, with potential implications for employment and consumer spending detailed by economic estimates.
- Interest rate expectations remain focused on a likely rate cut by the Federal Reserve at its upcoming FOMC meeting, while European markets showed strength, with indices reaching new highs.
Market Overview
Stock indices presented a mixed performance today, with the Dow Jones Industrials achieving a 1.5-week high. The broader market saw a slight upward trend, buoyed by positive corporate announcements.
General Motors (GM) surged over 12% after increasing its full-year adjusted earnings per share (EPS) estimate. Similarly, RTX Corp (RTX) climbed more than 10% following an upward revision of its full-year adjusted sales forecast. Coca-Cola (KO) also contributed to the positive sentiment, rising over 3% after reporting better-than-expected third-quarter comparable EPS.
Conversely, mining stocks faced pressure as gold prices dropped more than 3% and silver prices fell over 5%. This decline impacted major mining companies, with Newmont (NEM) leading the S&P 500 decliners, down over 8%. Other mining stocks like Barrick Mining (B), Coeur Mining (CDE), Kinross Gold (KGC), Anglogold Ashanti Plc (AU), and Freeport McMoRan (FCX) also saw losses exceeding 3%.
Market Drivers and Economic Factors
The gains in the overall stock market were tempered as investors consolidated recent sharp advances. Market participants are closely monitoring progress in US-China trade negotiations. President Trump reiterated his intention to increase tariffs on Chinese goods if a deal is not reached by November 1. A significant meeting between President Trump and Chinese President Xi Jinping is anticipated next week on the sidelines of the Asia-Pacific Economic Cooperation conference in South Korea.
In terms of minor US economic news, the Philadelphia Fed’s non-manufacturing business activity survey for October declined by 9.9 points to a four-month low of -22.2, indicating a contraction in the non-manufacturing sector.
⚡ The US government shutdown has now entered its fourth week, creating downward pressure on market sentiment and causing delays in the release of crucial economic reports. This shutdown affects the timely publication of key data, including recent weekly initial unemployment claims and the September payroll report. The Bureau of Labor Statistics (BLS) has rescheduled the September consumer price report for release this Friday, which was originally due last Wednesday. The White House has cautioned that a prolonged shutdown could lead to extensive dismissals of government employees in programs not aligned with President Trump’s priorities. Bloomberg Economics projects that approximately 640,000 federal workers could be furloughed, potentially increasing jobless claims and raising the unemployment rate to an estimated 4.7%.
The combination of US-China trade tensions, the ongoing government shutdown, and concerns over US credit quality has fueled a rally in precious metals, historically seen as safe-haven assets. Gold and silver reached new all-time highs last Friday as investors sought refuge.
Q3 Earnings Season and Future Outlook
This week’s market focus is on corporate earnings reports as the third-quarter earnings season progresses. Rising corporate earnings expectations are providing a bullish backdrop for equities. According to Bloomberg Intelligence, 85% of S&P 500 companies that have reported so far have exceeded earnings forecasts. Furthermore, over 22% of S&P 500 companies providing guidance for their Q3 results are expected to surpass analyst expectations, marking the highest proportion in a year.
📊 However, the overall growth in Q3 profits is anticipated to be around +7.2% year-over-year, which represents the smallest increase in two years. Additionally, Q3 sales growth is projected to slow down to +5.9% year-over-year, compared to +6.4% in the second quarter.
The markets are largely pricing in a near-certainty (99% probability) of a 25 basis point interest rate cut at the upcoming FOMC meeting scheduled for October 28-29.
Global Markets and Interest Rates
Overseas stock markets are trading higher today. The Euro Stoxx 50 index reached a new all-time high, posting a gain of +0.05%. China’s Shanghai Composite concluded the trading day up by +1.36%, while Japan’s Nikkei Stock 225 also hit a new record high, closing up +0.27%.
Interest Rates
December 10-year T-notes (ZNZ5) are up by 5 ticks, with the 10-year T-note yield decreasing by 2.7 basis points to 3.953%. T-note prices experienced modest gains today, supported by the ongoing US government shutdown. The potential for increased job losses, reduced consumer spending, and a weakened US economy could lead the Federal Reserve to continue its interest rate cuts. These gains were maintained after the release of the October Philadelphia Fed non-manufacturing business activity survey, which fell to a four-month low.
European government bond yields are trending lower today. The 10-year German bund yield is down 2.2 basis points to 2.555%, and the 10-year UK gilt yield has decreased by 3.2 basis points to 4.473%.
Swaps indicate approximately a 2% chance of a 25 basis point rate cut by the European Central Bank (ECB) at its next policy meeting on October 30.
US Stock Movers
Top Gainers
General Motors (GM) is leading the S&P 500 gainers, up more than +12%, after raising its full-year adjusted EPS forecast to a range of $9.75-$10.50, up from the previous estimate of $8.25-$10.00.
Warner Bros. Discovery (WBD) is a top performer in the Nasdaq 100, climbing over +10% following the announcement of a review of strategic alternatives aimed at maximizing shareholder value.
RTX Corp (RTX) is up more than +10% after boosting its full-year adjusted sales estimate to between $86.5 billion and $87.0 billion, from a prior range of $84.75 billion to $85.50 billion.
Halliburton (HAL) has gained more than +8% after reporting third-quarter revenue of $5.60 billion, surpassing the consensus estimate of $5.39 billion.
Danaher (DHR) is trading up more than +8% after announcing third-quarter adjusted EPS of $1.89, which exceeded the consensus forecast of $1.72.
Crown Holdings (CCK) has risen over +4% after increasing its full-year adjusted EPS estimate to $7.70-$7.80, up from $7.10-$7.50 and above the consensus of $7.39.
Coca-Cola (KO) is leading the Dow Jones Industrials gainers, up more than +3%, after reporting third-quarter comparable EPS of 82 cents, beating the consensus of 78 cents.
3M Co (MMM) is experiencing a gain of over +2% after raising its full-year adjusted EPS from continuing operations to $7.95-$8.05, an improvement from the $7.75-$8.00 range.
Top Losers
Mining stocks are under significant pressure today. Newmont (NEM) is down more than -8%, leading the S&P 500 decliners, as gold prices fell over -3% and silver prices dropped more than -5%. Barrick Mining (B), Coeur Mining (CDE), Kinross Gold (KGC), Anglogold Ashanti Plc (AU), and Freeport McMoRan (FCX) are all down more than -3%.
Cleveland-Cliffs (CLF) has fallen over -14% after Wells Fargo Securities downgraded its rating to ‘underweight’ from ‘equal weight,’ setting a price target of $11.
NuScale Power (SMR) is down more than -7% following a downgrade to ‘sell’ from ‘neutral’ by Citigroup, with a price target of $37.50.
Elevance Health (ELV) is down more than -4%, despite reporting better-than-expected Q3 operating revenue. The company indicated that it anticipates a modestly negative Medicaid operating margin for 2025.
PulteGroup (PHM) has declined more than -3% after reporting a -18% year-over-year decrease in its Q3 backlog of home orders to 9,888, which fell short of the consensus estimate of 9,990.
Northrop Grumman (NOC) is down slightly over -1% after revising its full-year sales forecast downward to $41.70 billion-$41.90 billion, from a previous range of $43.05 billion-$42.25 billion, and below the consensus of $42.22 billion.
W. R. Berkley (WRB) is down over -1% after reporting Q3 net premiums written of $3.23 billion, which missed the consensus estimate of $3.28 billion.
Upcoming Earnings Reports (October 21, 2025)
- 3M Co (MMM)
- Agree Realty Corp (ADC)
- Capital One Financial Corp (COF)
- Chubb Ltd (CB)
- Coca-Cola Co/The (KO)
- Danaher Corp (DHR)
- East West Bancorp Inc (EWBC)
- Elevance Health Inc (ELV)
- EQT Corp (EQT)
- Equifax Inc (EFX)
- General Electric Co (GE)
- General Motors Co (GM)
- Genuine Parts Co (GPC)
- Halliburton Co (HAL)
- Intuitive Surgical Inc (ISRG)
- Lockheed Martin Corp (LMT)
- Manhattan Associates Inc (MANH)
- Matador Resources Co (MTDR)
- Mattel Inc (MAT)
- Nasdaq Inc (NDAQ)
- Netflix Inc (NFLX)
- Northrop Grumman Corp (NOC)
- Omnicom Group Inc (OMC)
- PACCAR Inc (PCAR)
- Pegasystems Inc (PEGA)
- Pentair PLC (PNR)
- Philip Morris International Inc (PM)
- PulteGroup Inc (PHM)
- Quest Diagnostics Inc (DGX)
- RTX Corp (RTX)
- Texas Instruments Inc (TXN)
- Valmont Industries Inc (VMI)
- Weatherford International PLC (WFRD)
- Western Alliance Bancorp (WAL)
Final Thoughts
Market indicators show a mixed trading environment, with select companies reporting strong earnings that prop up indices like the Dow Jones. Investors are navigating a complex landscape influenced by trade negotiations, economic data, and the ongoing government shutdown.
The focus remains on the Q3 earnings season for insights into corporate health, while macroeconomic factors like interest rate expectations and geopolitical developments continue to shape market sentiment.