Volatility made quite the comeback this week, with the Cboe Volatility Index (VIX) hitting its highest level since April. The Dow Jones Industrial Average (DJI) snapped its five-day losing streak on Monday, as President Donald Trump attempted to smooth U.S.-China trade tensions over. The respite didn't last, though, with China imposing new sanctions on five of Hanwha Ocean's subsidiaries in the U.S., while Trump threatened to issue a cooking oil embargo.
Upbeat bank earnings initially contributed to optimism, but couldn't keep the Dow afloat for long. Borrower fraud and bad loan incidents involving Zions Bancorp (ZION) and Western Alliance (WAL) made investors jittery and dragged banks stocks lower. Fears around the financial sector lingered on Friday, though the three major benchmarks remained on track for weekly gains. Meanwhile, traders flocked to gold throughout the week, with the yellow metal enjoying several record highs.
Biggest Earnings Stories
Earnings season picked up this week. Fastenal (FAST) stock gapped lower on a profit miss, while Johnson & Johnson (JNJ) brushed off a beat-and-raise. Bank stocks Wells Fargo (WFC) and Goldman Sachs (GS) staged different post-earnings moves, while upbeat results from Morgan Stanley (MS) and Bank of America (BAC) propped Wall Street higher. Lastly, American Express (AXP) was pacing for its best day since April after a top- and bottom-line win.
Deals and Partnerships
Several companies teamed up this week. Bloom Energy (BE) secured a $5 billion investment from Brookfield Asset Management to power up AI data centers, while Broadcom (AVGO) is working with OpenAI to deploy custom AI processors and 10 gigawatts of OpenAI-designed AI accelerators. A new deal between Facebook parent Meta Platforms (META) and Arm Technologies (ARM) also made headlines, with the former expected to use the latter's data center platforms to enable its AI ranking and recommendation systems.
Inflation Data, Blue-Chip Earnings Ahead
There's still no end in sight for the government shutdown, but inflation data and key earnings reports are due out next week. More specifically, investors will be eyeing the consumer price index (CPI) reading for September, as well as S&P flash U.S. services and manufacturing data. On the earnings front, they will be unpacking reports from 3M (MMM), AT&T (T), Cleveland-Cliffs, (CLF) Coca-Cola (KO), Ford Motor (F), Netflix (NFLX), IBM (IBM), and Tesla (TSLA) among others. Before then, take look at what falling historical volatility could mean for the SPX, and why pullback risk for the benchmark is on the rise.
