Strong Balance Sheets Leave Inflation Behind

Stocks Soaring on Wall Street

Despite trade tensions between the U.S. and China and uncertainties in the credit markets, the rise in U.S. stock markets continues to attract attention. The solid earnings reports from American companies largely soothe investor concerns about economic weakness.

Quarterly Reports and Rising Trend

The S&P 500 index has seen 130 companies announce their quarterly reports since the earnings season began. It was noted that 86% of these earnings exceeded analyst expectations. Thus, the S&P 500 index rose by 1.1% on a weekly basis as of Thursday's close, approaching new highs.

Inflation Data and Market Reaction

Inflation data, which came in below expectations, boosted investor morale, and in pre-market futures on Friday morning, the index showed a 0.5% increase. Sonu Varghese, Global Macro Strategist at Carson Group, stated that the importance of earnings data has increased, remarking that "so far, everything looks good."

Highlighted Companies' Performance

Las Vegas Sands’ shares rose 12% after the company reported earnings exceeding expectations due to international investments. Dow Inc.’s third-quarter profit delighted investors, increasing its stock price by 13%. General Motors' shares surged 15%, marking its largest daily gain since 2020, due to strong SUV demand.

Uncertainties in the Credit Market

Concerns about the credit market have been rising in recent days. The bankruptcies of auto parts manufacturers First Brands and Tricolor hindered investors' ability to breathe a sigh of relief. However, many analysts emphasize that the false alarms during this process are exaggerated and that both borrowers and creditors are generally in solid condition.

General Optimism in the Markets

The general optimism in the markets is based on the increase in home sales due to falling mortgage rates and government-supported data. Still, some investors believe that the government shutdown has weakened the economic outlook. However, the demand for high-yield bonds in the credit market indicates that investors remain cautious and prudent.