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Stocks closed higher again yesterday with all of the major indexes in the green.
Kevin Matras   
Profit from the Pros
By Kevin Matras
Executive Vice President
Zacks Investment Research
  

Stocks Up Again On AI Optimism And Earnings

Stocks closed higher again yesterday with all of the major indexes in the green. The tech-heavy Nasdaq led the way with 1.18%, followed by the small-cap Russell 2000 with 1.16%, and the S&P 500 with 0.60%.

Tech and AI were the key drivers again. Semiconductors and AI infrastructure led the move higher with chip stocks broadly rallying.

But small-caps, after being oversold, continued their bounce. After hitting their cycle-low close two Friday's ago, the Russell is up 3.58% in just the last 7 trading days.

While oil ticked up yesterday (albeit not by much), with more oil coming out of the Middle East now (roughly 24 million barrels a day as of last week) than before the war began, that is helping take some pressure off of prices.

Treasury yields were up as well with the 10-year closing at 4.993%. But yields have been falling for the last week and a half. It's down nearly -11 basis points from the previous week's close of 5.098%. And down more than -35 bps from the high of 5.349% from the week prior to that.

The Fed makes their next announcement on rates this afternoon. At the moment, the odds are at 93.4% that the Fed keeps rates unchanged. Especially with midterms a little more than a week away. While the expectation is still for one more rate hike at their final meeting of the year on December 9th, it's not a done deal. And investors will be listening to every word Fed Chair Kevin Warsh has to say at the customary press conference that will follow. The Announcement comes out at 2:00 PM ET. The Fed Chair Press Conference is at 2:30.

Aside from the Fed news, earnings will also be in focus.

Today we'll hear from two Magnificent 7 stocks -- Alphabet and Microsoft, after the close.

But we'll also hear from plenty of other marquee names today, including KLA, Amphenol and UBS before the open, along with ServiceNow Fortinet and Phillips 66 after the close. All in all, we'll hear from as many as 241 companies today.

In other news, yesterday's Durable Goods Orders showed New Orders up 1.8% for September vs. last month's 0.1% and views for 1.4%. Ex-Transportation it was up 0.5% m/m vs. last month's 0.3% and estimates for 0.6%. And Core Capital Goods were up 0.5% vs. last month's 1.6% and forecast for 0.7%.

The Case-Shiller Home Price Index (adjusted) was up 0.3% m/m vs. last month's 0.3% and consensus for the same. On an unadjusted basis it was off -0.4% vs. last month's 0.0% and estimate for -0.1%. On a y/y basis (unadjusted) it was up 2.7% vs. last month's 2.5% pace and outlook for 2.6%.

New Home Sales came in at 676,000 units (annualized) vs. last month's 680K and estimates for 651K.

And Consumer Confidence improved to 91.7 vs. last month's upwardly revised 84.2 (from 81.9), and views for 80.4.

Today we'll get MBA Mortgage Applications, Retail and Wholesale Inventories, and the Survey of Business Uncertainty.

But aside from earnings, it's the FOMC Announcement that will be the main event.

Only 3 more trading days left in the month. At the moment, the S&P, Dow, and the Russell 2000 are in the green for October. The Nasdaq still has some work to do, but is just 1.43% away from getting into the plus column.

A little bit of good news and some follow through buying could help make that happen.

See you tomorrow,

, Zacks Investment Research

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