Traders are facing choppy conditions in US stocks as markets digest a slew of earnings reports from different companies. Indices were down on Wednesday in anticipation of poor sales reports, particularly in the technology sector, but in the end the fears were overblown. Tesla (TSLA) stock gained a massive 22% on Thursday following stellar third-quarter earnings; United Parcel Service (UPS) enjoyed a 5.3% rise on similarly positive sentiment; other major tech stocks remained stable. IBM on the other hand fell over 6% following a mixed report and Honeywell (HON) shed 5.1% after slashing its sales outlook. After all was said and done, the Dow Jones was unable to end its losing streak, losing another 0.3% yesterday and sustaining a fourth consecutive daily loss. The S&P 500 closed 0.2% in the black, in no small part thanks to the aforementioned Tesla surge. The Nasdaq Composite fared even better, climbing 0.76% and recovering from the bulk of Wednesday’s rout.
Of course, stock markets are not isolated entities, intertwined as they are with their respective currencies. The Dollar took a step back yesterday as market participants try to figure out what the Federal Reserve has in store. Many are beginning to accept that future rate cuts will be harder to come by than initially thought. The last 50 basis point cut appears to have been a one-off event. The Fed is not the only factor at play however: the US election is now less than two weeks away. Betting markets are currently favouring a Trump victory, although such a result is not heavily priced in at this point. A bullish case for the USD could be made for either candidate, but then of course there is also the third possibility of an unclear or even disputed result. The election will likely occupy the centre stage until its conclusion, at which point we can expect attentions to turn back to talk of rate cuts, China stimulus and the ongoing sell-off in bonds, among other elements.
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