The S&P 500 Index and the Dow Jones both moved to record highs over the week, helped by some upside surprises to kick off earnings season. Shares in JPMorgan Chase and Wells Fargo rose on Friday after they reported smaller-than-feared declines in Q3 profits. A solid rise in NVIDIA shares helped growth stocks outperform value stocks and compensate for a decline in Google parent Alphabet. Tesla was also weak following a skeptical response to the company’s highly anticipated unveiling of its new “robotaxis” and “robovans.” The earnings focus arguably offset several disappointing economic reports over the week: headline and core (less food and energy) inflation rose in September by 0.2% and 0.3%, respectively, both a tick above expectations.

The Fed cuts rates, meanwhile Europe teeters on the brink of recession, China ramps up stimulus, and U.S. debt surges. Developed market equities surge amid global challenges, while fixed income rallies on easing rate expectations. Each quarter, the Syz investment team takes you through the last 3 months in 10 charts.

After a week of better-than-expected U.S. economic data and rising oil prices, bond markets adjusted their expectations, now aligning with the Fed's forecast of two rate cuts by year-end, removing a previously anticipated full cut.

Abundant liquidity in the market is supporting gold and stocks and may even lead to a new bear market rally in China, while the Fed's rate cut may have minimal impact on U.S. equities.

Thanks to a rally on Friday, US blue chips stocks recorded a 4th consecutive weekly gain despite growing tensions in the Middle East and the dockworkers’ strike at Eastern seaports. Escalating Middle East tensions sent oil prices to their highest level in about a month, benefiting energy shares. The S&P 500 pulled back sharply (-1.38%) on Tuesday, as Iran fired nearly 200 missiles directly at Israel. While many of the missiles were intercepted, there were several hits in the southern and central parts of the country and threats of “more devastating attacks” if Israel responded. Markets stabilized on Wednesday, however, perhaps because worst-case scenarios failed to materialize.

Between France’s increasing yields and the UK’s colossal debt-to-GDP ratio, Europe is facing difficulties financing itself. Meanwhile, SNB head bows out with a last rate cut and China unveils its massive stimulus plan. Each week, the Syz investment team takes you through the last seven days in seven charts.

Despite mixed economic data, bonds remained flat over the week, with emerging market bonds outperforming, driven by Chinese stimulus measures.

The Dow Jones and the S&P 500 Index moved to record highs, as investors appeared to celebrate new stimulus measures in China. Chemicals and materials stocks were particularly strong. Copper prices also increased. Tech stocks outperformed as well, helped by reports of a possible takeover of Intel and news that NVIDIA’s CEO had ceased sales of his own shares in the company. In addition, chipmaker Micron Technology surged and seemed to provide a general tailwind for the sector following its upbeat outlook for AI demand. Some benign inflation data helped spur an early rally Friday; the Fed’s preferred inflation gauge, the core (less food and energy) personal consumer expenditures (PCE) price index, rose only 0.1% in August, a tick below expectations.

Flash note

As the Fed pivot starts with a 50-basis-point slash, the bond market expects more to come, and gold should benefit. Meanwhile, the risk of a second inflationary wave isn’t dismissed, and the Nasdaq 100 is as highly concentrated as ever. Each week, the Syz investment team takes you through the last seven days in seven charts.