Stocks enjoyed a profitable week in the lead-up to third quarter earnings season. The tech-heavy NASDAQ started the week strong, ending Monday at a record high. Meta and Microsoft both jumped two per cent, as market players favored the AI hyperscalers. Microsoft has now gained more than 40 per cent since the end of June, and more than 11 per cent for the year through October 9. Meta, meanwhile, has staged a similar recovery, bouncing nearly 30 per cent since June and climbing nine per cent for the year to date. Microsoft has seen positive results from Azure and CoPilot, while Meta has surged on strong adoption of AI agent Meta Muse. Meta pitched Muse as the “first personal AI agent”, and it quickly topped the app download charts.
SpaceX has also rebounded. Since a post-IPO slump, the stock has gained more than 50 per cent. Concerns about insiders selling shares as lockups expired weighed heavily on the stock price in July. But those concerns appear overblown, as the expected flood of selling has failed to materialize. Further, SpaceX announced a 100 million square foot semiconductor complex in Texas, and a successful launch of the company’s first orbital Starship flight. And last week SpaceX agreed to purchase a wireless spectrum portfolio, which could position its Starlink Mobile as a serious competitive threat to wireless giants AT&T and Verizon. The spectrum news provided a big lift for cell tower owners Crown Castle and American Tower, as the satellite company will likely need a tower presence to fully compete with the legacy providers.
Bond yields leveled off last week but remained elevated. The 10-year Treasury yield reached its highest level since 2002 on Wednesday before dipping a bit at week’s end. Fed Governor Christopher Waller said more rate hikes are needed to bring inflation down, but yields eased after President Trump announced the US wouldn’t attack Iran before the midterm elections. The benchmark bond index ended the week fractionally higher but remains mired in negative territory for the year to date.
See more: 4 Practical Uses of TIPS in the Portfolio
Looking ahead, third-quarter earnings season kicks off this week with reports from Goldman Sachs, JP Morgan, and Bank of America. The banks should be profiting from healthy spread income and good loan growth, but slower investment banking activity could be a headwind. We’ll also get reports from Taiwan Semiconductor and Johnson & Johnson. A strong start to earnings season could push interest-rate concerns into the background and provide support for stock prices to move beyond their recent highs.
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