The S&P 500 Index ($SPX) (SPY) on Monday closed up +1.07%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +1.12%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.30%. December E-mini S&P futures (ESZ25) rose +1.12%, and December E-mini Nasdaq futures (NQZ25) rose +1.32%.
Stock index futures rallied on Monday and added to last Friday’s gains, with the S&P 500 and Nasdaq 100 posting 1-week highs, and the Dow Jones Industrials posting a 1.5-week high. Market sentiment has improved as US-China trade tensions eased after President Trump on Sunday said that “I think we’re going to be fine with China.” Stocks are also seeing support from optimism that Q3 earnings results will continue to surprise to the upside. Carry-over support from rallies in European and Japanese stocks to record highs on Monday also underpinned US stocks. Additionally, lower bond yields are supportive of stocks as the 10-year T-note yield fell -3 bp on Monday to 3.98%.
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Treasury Secretary Bessent said the US and China will hold talks this week in Malaysia to prepare for President Trump’s meeting with Chinese President Xi Jinping later this month on the sidelines of the Asia-Pacific Economic Cooperation conference in South Korea.
Better-than-expected Chinese economic news is supportive of global growth prospects. China Q3 GDP rose +1.1% q/q and +4.8% y/y, stronger than expectations of +0.8% q/q and +4.7% y/y. Also, China’s Sep industrial production rose +6.5% y/y, stronger than expectations of +5.0% y/y. In addition, China’s Sep jobless rate unexpectedly fell -0.1 to 5.2%, showing a stronger labor market than expectations of no change at 5.3%.
The shutdown of the US government continues into its fourth week, weighing on market sentiment and delaying key economic reports. The government shutdown means delays in the release of government reports, including the last three weeks of weekly initial unemployment claims and the Sep payroll report. The Bureau of Labor Statistics (BLS) said the September consumer price report, which was initially scheduled to be released last Wednesday, will be released this Friday. The White House has warned that if the government shutdown lingers, it would trigger widespread dismissals of employees in government programs that don’t align with President Trump’s priorities. Bloomberg Economics estimates that 640,000 federal workers will be furloughed during the shutdown, which would expand jobless claims and push the unemployment rate up to 4.7%.
Trade tensions between the US and China, the ongoing US government shutdown, and fears about credit quality in the US have sparked a buying spree in precious metals as a haven, with gold and silver reaching fresh all-time highs last Friday.
The markets this week will focus on earnings results as the Q3 earnings season continues. Rising corporate earnings expectations are a bullish backdrop for stocks. According to Bloomberg Intelligence, 85% of the S&P 500 companies that have reported so far have beaten forecasts. Also, more than 22% of companies in the S&P 500 that have provided guidance for their Q3 earnings results are expected to beat analysts’ expectations, the highest in a year. However, Q3 profits are expected to have risen by +7.2% y/y, the smallest increase in two years. Also, Q3 sales growth is projected to slow to +5.9% y/y from 6.4% in Q2.
The markets are pricing in a 99% chance of a -25 bp rate cut at the next FOMC meeting on Oct 28-29.
Overseas stock markets are higher today. The Euro Stoxx 50 rose to a new record high and closed up +1.31%. China’s Shanghai Composite closed up +0.63%. Japan’s Nikkei Stock 225 rallied to a new record high and closed up sharply by +3.37%.
Interest Rates
December 10-year T-notes (ZNZ5) on Monday closed up +4 ticks. The 10-year T-note yield fell -2.5 bp to 3.984%. T-notes recovered from early losses and moved higher on Monday due to a slide in inflation expectations after the 10-year breakeven inflation rate fell to a 4.25-month low of 2.262%. T-notes also have support due to the ongoing US government shutdown, which could lead to additional job losses, reduced consumer spending, and a weakened US economy, potentially allowing the Fed to continue cutting interest rates.
Strength in stocks on Monday curbed safe-haven demand for government debt securities and limited gains in T-note prices. Also, the easing of US-China trade tensions has curbed safe-haven demand for government debt securities and is undercutting T-note prices after President Trump said things will be “fine” with China.
European government bond yields moved lower on Monday. The 10-year German bund yield fell -0.3 bp to 2.577%. The 10-year UK gilt yield fell -2.6 bp to 4.505%.
German Sep PPI fell -0.1% m/m and -1.7% y/y, weaker than expectations of +0.1% m/m and -1.5% y/y.
Late last Friday, S&P Global Ratings lowered France’s sovereign debt credit rating to A+ from AA-, citing the country’s budget uncertainty as “elevated” despite the submission of a 2025 draft budget.
Swaps are discounting a 2% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30.
US Stock Movers
Most Magnificent Seven technology stocks rallied on Monday and provided support to the overall market. Apple (AAPL) closed up more than +3% and Meta Platforms (META) closed up more than +2%. Also, Alphabet (GOOGL), Amazon.com (AMZN), and Tesla (TSLA) closed up more than +1%. In addition, Microsoft (MSFT) closed up +0.63%.
Chipmakers and AI infrastructure stocks moved higher on Monday to support gains in the broader market. Super Micro Computer (SMCI) closed up more than +5%, and ON Semiconductor (ON) and KLA Corp (KLAC) closed up more than +4%. Also, Advanced Micro Devices (AMD), ARM Holdings Plc (ARM), and Microchip Technology (MCHP) closed up more than +3%. In addition, NXP Semiconductors NV (NXPI), Micron Technology (MU), Lam Research (LRCX), GlobalFoundries (GFS), and Intel (INTC) closed up more than +2%.
Cryptocurrency-exposed stocks moved higher on Monday after the price of Bitcoin rose more than +3% following last Friday’s fall to a 3.75-month low. As a result, Coinbase Global (COIN), Galaxy Digital (GLXY), MARA Holdings (MARA), Riot Platforms (RIOT), and Strategy (MSTR) are up more than +2%.
Celcuity Inc. (CELC) closed up more than +35% after reporting “statistically significant” improvement in a trial of its gedatolisib drug in combination with palbociclib and fulvestrant in the treatment of breast cancer patients.
Cleveland-Cliffs (CLF) closed up more than +21% after reporting a Q3 adjusted loss per share of -45 cents, a smaller loss than the consensus of -47 cents. Also, the company said it had entered into an agreement with a “major global steel producer.”
Sable Offshore Corp. (SOC) closed up more than +6% after US Secretary of Energy Wright supported the company’s effort to restart one of its California oil projects that is awaiting state approval.
Cooper Cos. (COO) closed up more than +4% after the Wall Street Journal reported that Jana Partners has built a stake in the company and plans to push for strategic alternatives.
nCino (NCNO) closed up more than +4% after Raymond James upgraded the stock to strong buy from outperform with a price target of $36.
Lululemon Athletica (LULU) closed up more than +2% after BNP Paribas Exane upgraded the stock to neutral from underperform.
Hologic (HOLX) closed up more than +2% on news that Blackstone and TPG Inc. are in advanced negotiations to acquire the company.
AppLovin (APP) closed down more than -5% to lead losers in the S&P 500 and Nasdaq 100 after the New York Times reported that several state regulators have reached out to short sellers in a possible preliminary probe of the company.
Progressive Corp (PGR) closed down more than -2% after Morgan Stanley downgraded the stock to underweight from equal weight with a price target of $214.
Marvell Technology (MRVL) closed down more than -2% after Barclays downgraded the stock to equal weight from overweight.
Astera Labs (ALAB) closed down more than -2% after Barclays downgraded the stock to equal weight from overweight.
Lumentum Holdings (LITE) closed down more than -2% after Barclays downgraded the stock to equal weight from overweight.
Earnings Reports(10/21/2025)
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).
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