Stocks Boosted by Strength in Chipmakers and Earnings Optimism

Economic Overview - The Fed Beige Book indicates that US economic activity remained stable, with employment levels unchanged, but consumer spending has slightly decreased and prices are rising, particularly input costs [1] - The ongoing US government shutdown is affecting market sentiment and delaying key economic reports, with estimates suggesting that 640,000 federal workers may be furloughed, potentially increasing jobless claims and raising the unemployment rate to 4.7% [7] Market Performance - Stock indexes showed mixed results, with the S&P 500 Index closing up by 0.40% and the Dow Jones down by 0.04%, while the Nasdaq 100 rose by 0.68% [6] - The October Empire manufacturing survey reported a significant increase in the general business conditions index, rising by 19.4 to 10.7, surpassing expectations [2] Corporate Earnings - The Q3 earnings season is underway, with 71% of the 24 S&P 500 companies that have reported so far beating forecasts, although overall profit growth is expected to be the smallest in two years at 7.2% year-over-year [8] - Notable companies such as Morgan Stanley and Bank of America reported strong Q3 earnings, with Morgan Stanley's FICC sales and trading revenue at $2.17 billion, exceeding consensus estimates [20] Sector Movements - Chipmakers and AI infrastructure stocks saw significant gains, with ASML Holding up more than 2% after reporting stronger-than-expected Q3 new orders, and Advanced Micro Devices leading the Nasdaq 100 with a rise of over 9% [17] - Gold mining stocks also performed well, with Kinross Gold and Barrick Mining rising by more than 5% and 4% respectively, following a record high in gold prices [18] Interest Rates and Monetary Policy - The market is anticipating a 98% chance of a 25 basis point rate cut at the upcoming FOMC meeting on October 28-29, influenced by dovish comments from Boston Fed President Susan Collins [9][12] - The 10-year T-note yield rose to 4.038%, reflecting a hawkish sentiment due to rising input costs as noted in the Fed Beige Book [11]