Financial market participants continue to exhibit a purchasing inclination on Wall Street.
The DJIA Sets New Records: Despite a Robust Earnings Season and Anticipated Rate Cuts, Even in the US, the Dow Jagged Upward.
Propelled by vigorous chip shares and positive consumer data, the DJIA scaled new heights on Thursday, closing 0.4% higher at a record-breaking 43,239 points. The tech-dominated Nasdaq remained stable at 18,373, while the comprehensive S&P 500 held its ground at 5,841.
The buoyant commencement of the third-quarter earnings season and speculations of additional monetary easing by the Federal Reserve have stoked the recent surge in equities. However, analysts issue warnings about increasingly inflated valuations, overly optimistic profit expectations, and potential market turbulence leading up to the US presidential elections in November.
Delighted investors welcomed the news that US retail sales in September increased by 0.4%, slightly surpassing predictions. "Strong retail sales evidence the robustness of US consumer spending, which has propelled the economy out of recessions in recent times," stated Keith Buchanan, chief investment strategist at GLOBALT Investments. Simultaneously, weekly jobless claims inexplicably decreased.
The data confirmed the picture of a flourishing economy in the world's biggest economy, while bets on a 25 basis point cut by the Federal Reserve at its next rendezvous endured mostly unaltered at 89.4%. In the Eurozone, the European Central Bank (ECB) trimmed interest rates for the third time in 2021. Anticipating further rate reductions, the Euro slid 0.3% to 1.0827 against the USD. The Gold price briefly hit a new record of $2,688.82 per ounce.
TSMC Uplifts Semiconductor Sector
In the tech sector, an uptick in revenues at Taiwanese chip manufacturer TSMC brightened spirits. The firm, which manufactures chips for clients such as Nvidia and Apple, witnessed its profits balloon by 54% and anticipates sustained demand for AI chips. TSMC's US-traded shares soared by nearly 10%. Other semiconductor stocks also profited, with the Philadelphia Semiconductor Index rising 1%. Nvidia shares temporarily spiked by 4% to an all-time high of $140.89, post-TSMC.
Strong quarterly performances captivated investors in Travelers, resulting in the insurer's shares jumping by 9%. Higher investment yields boosted the company's core earnings to $1.22 billion, up from $454 million the year prior.
Conversely, Lucid's shares nosedived by almost 18% after the electric vehicle startup declared it expects a sizeable loss in the third quarter due to high expenditures and sluggish sales.
Following a similar downbeat outlook, Elevance Health's shares tumbled by more than 10%. The health insurer revised its 2024 adjusted earnings per share estimate from $33 to a minimum of $37.20. Shares of competitors Centene and CVS Health also dipped, by 9.1% and 2.1% respectively.
Netflix shed 2%. The streaming service divulged its results for the third quarter after US market hours, shocking investors with customer growth and profitability. Following disclosure, the stock initially climbed by 4%.
For additional insights on today's market action, read here.
In light of the strong earnings performances, investors enthusiastically engaged in [Trading in shares of Travelers], leading to an 9% surge in the insurer's shares. On the other hand, pessimistic reports caused significant declines in [Trading in shares of Lucid] and [Trading in shares of Elevance Health], with Lucid's shares plummeting by almost 18% and Elevance Health's shares dipping more than 10%.
