Stocks Supported by Hopes of Additional Fed Rate Cuts

Group 1: Corporate Earnings and Market Sentiment - Rising corporate earnings expectations are a bullish backdrop for stocks, with over 22% of S&P 500 companies providing guidance for Q3 earnings that are expected to beat analysts' expectations, the highest in a year [1] - S&P companies are expected to post +6.9% earnings growth in Q3, an increase from +6.7% as of the end of May [1] Group 2: Economic Indicators and Federal Reserve Policy - Cleveland Fed President Beth Hammack indicated that inflation is not expected to return to the Fed's 2% objective until late 2027 or early 2028, emphasizing the need for a restrictive policy stance [3] - The market is pricing in an 89% chance of a -25 basis point rate cut at the next FOMC meeting on October 28-29 [6] Group 3: Stock Market Performance - Stock indexes are mixed, with the broader market climbing and bond yields falling due to weak US labor market news reinforcing expectations for additional Fed interest rate cuts [5] - The S&P 500 Index is up +0.39%, while the Dow Jones Industrials Index is down -0.08%, and the Nasdaq 100 Index is up +0.78% [6] Group 4: Sector Performance - Chipmakers are leading technology stocks higher, with notable gains from GlobalFoundries (+4%), Micron Technology (+3%), and Nvidia (+2%) [12] - Energy producers are experiencing declines, with WTI crude oil prices down more than -2%, affecting companies like APA Corp (-3%) and Chevron (-2%) [13] Group 5: Notable Company Movements - Merus NV is up more than +38% following an acquisition announcement by Genmab for $8 billion or $97 per share [14] - Western Digital is up more than +9% after a target price increase by Rosenblatt Securities [14] - Electronic Arts is up more than +5% after a consortium acquired the company for $55 billion or $210 per share [14]