Last Week's Recap
The US Market - Stocks rallied as an expectation-defying jobs report
Stocks rallied on Friday after an expectation-defying jobs report gave investors confidence around the health of the economy, erasing losses seen in recent days. Mounting geopolitical tensions in the Middle East gave way to a shaky start in October for stocks.
Friday's Data showed nonfarm payrolls grew by 254,000 jobs in September, far outpacing the forecasted gain of 150,000 from economists polled by Dow Jones. The unemployment rate fell to 4.1%. The news for the equity market as it increases the potential for a soft landing.
China’s stimulus sent the Nasdaq Golden Dragon Index soaring 12.5% in the last four days, and it skyrocketed nearly 40% for September. Goldman’s specialist Scott Rubner thinks the long-awaited recovery in Chinese equities may finally have arrived and, if so, investors should want to get in on it.
The US Sectors & Stocks - Chinese ADRs continued to ride high
Oil has been pushed higher as a result of intensifying conflict in the Middle East after Iran launched a missile attack on Israel. Crude oil prices logged the weekly gain to around 9%. Energy stocks jumped, with the energy sector up 6% over the week to lead the S&P 500. That marked the group’s best week since October 2022.
Beijing’s announcements of economic support have fueled Chinese stocks on a tear. Chinese stock ETFs continued to ride high through the week to notch a fourth straight weekly gain. The CSI 300 China A-Shares ETF (ASHR) soared 20% this week, while the KraneShares CSI China Internet ETF (KWEB) and iShares China Large-Cap ETF (FXI) popped 13% and 11%, respectively.
Chinese ADRs jumped again this week as stimuluspolicies continue. Among Chinese companies with a market value greater than $10 billion, Ke holding (BEKE) surged 29% for the week, while PDD Holdings (PDD) and JD.com soared 14% and 18%, respectively.
Tesla (TSLA) delivered 462,890 EVs in Q3, up 6% vs. a year earlier and in line with various estimates. But it was below whisper numbers of 465,000-470,000. The stock price fell 4% for the week.
Nvidia (NVDA) rose as CEO Jensen Huang cited "insane" demand for the next-generation Blackwell AI chips. He also said Blackwell production is in full swing.
Spirit Airlines (SAVE) dived 25% as the ultra-low-cost carrier reportedly is mulling a bankruptcy. Earlier this year, a federal judge, siding with antitrust regulators, blocked a Spirit merger with JetBlue Airways, saying that would hurt competition.
Rivian (RIVN) fell after the electric-vehicle maker cut its annual production guidance to between 47,000 and 49,000 vehicles, versus its prior guidance of 57,000 vehicles.
Nike (NKE) tumbled 8% after it released under-expected sales for FYQ1, and the company withdrew its full-year 2025 guidance. Instead, Nike will release quarterly outlooks and expects Q2 revenue down 8% to 10%.
Hong Kong Market - HSI skyrocketed 10%
Hong Kong stocks continued to advance, HSI soared for a fourth week in a row, hitting a 20-month high on mounting speculation China is not done with its stimulus to rescue the market. BlackRock said investors may expect more measures from Beijing to jump-start the ailing economy.
The Hang Seng Index (HSI) skyrocketed another 10% last week, and its 1,310-point rally on Friday was the biggest single-day jump since March 2022. Trading volume totalled HK$434 billion, despite the closure of the Stock Connect scheme that links the exchange with markets in Shanghai and Shenzhen.
"Many investors wanted to see the effects of the policies to justify a long-term market turnaround," John Choi, analyst at Daiwa Securities, wrote in a note to clients. This round of rally has more legs as many stocks are still trading below their three- and five-year averages, he said, adding that e-commerce verticals will be among the key beneficiaries of further fiscal stimulus measures.
The Week Ahead
Macro Factors - CPI, Fed minutes and Banks Earnings
An update on inflation、Fed minutes and the start of third quarter earnings reports will grab investor attention in the week.
On Thursday morning, the Bureau of Labor Statistics will release the consumer price index for September. Economists' consensus calls for a 2.3% increase from a year earlier, a slowdown of two-tenths of a percentage point from August. On a "core" basis, which strips out food and energy prices, CPI is forecast to have risen 3.2% over last year in September, unchanged from August. Monthly core price increases are expected to clock in at 0.2%, below the 0.3% seen in August.
On Wednesday afternoon, economists and Federal Reserve watchers will pay close attention to the minutes from the central bank's September policy meeting. Close observers will focus on details of the debate over whether to lower interest rates by a quarter or a half of a percentage point.
Tesla is expected to host its highly anticipated robotaxi event on Oct. 10. Tesla is expected to provide further details on its plans for its full self-driving project.
Big banks kick off a new earnings season. Consensus projects Q3 earnings to grow 4.7%. This would mark the fifth straight quarter of growth compared to the same period a year prior but would also be the slowest year-over-year growth since the fourth quarter of 2023.
Bank of America US and Canada equity strategist Ohsung Kwon told Yahoo Finance that with consensus not expecting a strong third quarter, much of the focus will be on what companies say about the path forward.
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