S&P 500 Rises on Strong Earnings and Growing Rate-Cut Expectations
The S&P 500 climbed on Wednesday, supported by a wave of better-than-expected corporate earnings and rising expectations that the Federal Reserve will deliver its second interest rate cut of the year later this month.
As of 12:57 ET (16:57 GMT), the Dow Jones Industrial Average gained 51 points, or 0.1%. The S&P 500 rose 0.3%, while the NASDAQ Composite added 0.6%.
Bank Earnings Boost Market Sentiment
A series of bullish bank earnings continued to lift market optimism and support risk appetite across Wall Street.
Bank of America (NYSE:BAC) raised the lower end of its interest income forecast and beat Wall Street expectations, driven by strong investment banking activity in the third quarter.
Morgan Stanley (NYSE:MS) also reported better-than-expected results, with profits rising as dealmaking activity rebounded.
Goldman Sachs (NYSE:GS) exceeded forecasts thanks to robust investment banking fees, while JPMorgan Chase (NYSE:JPM) raised its full-year net interest income guidance after another solid quarter.
Wells Fargo (NYSE:WFC) joined the list of outperformers, reporting higher profits supported by stronger deal activity and improved credit quality.
Beyond the banking sector, Dollar Tree (NASDAQ:DLTR) shares jumped 8.3% after the retailer reaffirmed its near-term outlook and projected strong three-year earnings growth ahead of its 2025 Investor Day in New York.
Meanwhile, United Airlines (NASDAQ:UAL) is set to release its latest results after market close, with investors closely watching its outlook for travel demand through the rest of the year.
Fed’s Miran Urges Swift Rate Cuts Following Powell’s Dovish Tone
Federal Reserve Governor Stephen Miran on Wednesday called for swift rate cuts, citing risks from worsening U.S.-China trade tensions.
“It’s more important now than ever that we move to a neutral stance,” Miran said, emphasizing the need to address potential economic risks.
His remarks followed comments from Fed Chair Jerome Powell, who signaled during a speech at the National Association for Business Economics that the Fed remains open to further easing. Powell noted that the economic outlook for inflation and employment hasn’t shifted significantly since September but acknowledged that labor market softness is becoming more visible.
Markets interpreted Powell’s comments as dovish, reinforcing expectations of additional rate cuts later in 2025.
U.S.-China Tensions Escalate
Tensions between the United States and China continue to escalate. Treasury Secretary Scott Bessent warned that the Trump administration will not soften its negotiating stance even if markets react negatively.
“We won’t negotiate because the stock market is going down,” Bessent told CNBC.
President Donald Trump intensified trade tensions by threatening to cut off trade ties in the cooking-oil sector, accusing Beijing of “purposefully not buying” U.S. soybeans and labeling the action “an economically hostile act.”
In response, China sanctioned five subsidiaries of South Korean shipbuilder Hanwha Ocean, viewed as retaliation for a U.S. investigation into China’s shipbuilding dominance.
Both nations have since imposed reciprocal port fees on vessels linked to each other, further heating up the trade battle and adding maritime pressure to already strained relations.
