The S&P 500 broke back into positive territory on Wednesday, lifted by stronger-than-expected quarterly results from Bank of America and Morgan Stanley. While concerns about U.S.-China trade tensions and the ongoing government shutdown lingered, investor sentiment was buoyed by a stronger-than-anticipated start to the earnings season.
The Dow Jones Industrial Average ended virtually unchanged, down 17 points or 0.04% at 46,253. The S&P 500 rose 0.4% to 6,671, after gaining as much as 1.2% intraday, while the Nasdaq Composite added 0.7% to 22,670.
Banks drive gains
Bank of America shares climbed 4.4% and Morgan Stanley jumped 4.7% after both banks beat earnings and revenue forecasts.
Volatility remains elevated
The day was marked by sharp swings, with the Dow up more than 400 points at one stage. The Cboe Volatility Index, Wall Street’s fear gauge, closed at 20.6, after peaking above 21.6 last week, its highest since late May. High-profile tech names also fluctuated, with Nvidia reversing early gains to close 0.1% lower.
Trade war pressures
Investors remain focused on escalating trade tensions. President Donald Trump this week threatened to impose a 100% tariff on Chinese goods and floated an embargo on cooking oil imports in retaliation for Beijing’s restrictions on rare earth exports. Treasury Secretary Scott Bessent said in an interview that market swings would not dictate negotiations. “We won’t negotiate because the stock market is going down. We will negotiate because we are doing what is best economically for the U.S.,” he said.
The standoff has introduced what Fed governor Stephen Miran described as a “new tail risk” for the global economy. He added that the shift in risks makes it more urgent to bring policy to a neutral stance quickly.
Government shutdown drags on
The U.S. government shutdown has now stretched into a third week, halting the release of key economic data and creating blind spots for traders.
Australian outlook
ASX futures point to a stronger open today, reversing earlier losses. Macquarie may benefit from news it has agreed to sell Texas-based Aligned Data Centers for US$40bn, with more large-scale exits expected in coming years. Locally, updates are due from AMP, Challenger and Santos, while the key release is the September Labour Force report at 11.30am.
