US Stock Rally Cools as October Turbulence, Earnings Season Loom

Market Performance - US equities have experienced one of their best stretches since the 1950s, despite concerns over economic strength and tariffs [1] - The S&P 500 Index is on track for another advance, although it fell for three consecutive days recently, marking the longest slump in a month [2] - The index has increased less than 1% since the Federal Reserve's rate cut on September 17 [2] Investor Sentiment - Positioning data indicates that investors are betting on a year-end rally, with volatility remaining below its long-term average [3] - Derivatives markets show that traders are paying more to protect against a potential market surge than a downturn [3] Economic Concerns - Wall Street veterans are cautioning against excessive enthusiasm for risk assets due to potential economic policy changes, including new tariffs imposed by President Trump [4] - The upcoming earnings season, starting with JPMorgan Chase & Co. on October 14, is critical for assessing the bull market's sustainability [5] Labor Market and Federal Reserve - Hiring data due on Friday will provide insights into the labor market, especially after recent signs of weakness led to the first Fed rate cut in a year [5] - The next Federal Reserve policy decision is scheduled for October 29, with mixed expectations regarding further rate reductions [5] Market Volatility - The market has largely ignored the potential threat of a government shutdown on October 1, although this risk is increasing [6] - October is historically known as the most volatile month for US equities, raising concerns about potential stock pullbacks [6][7]