S&P 500 Hits Record High as Strong Earnings, Fed Rate Cut Hopes Lift Markets

The latest round of third-quarter earnings continued to beat Wall Street expectations, providing fresh confidence for investors concerning the ability of the market to bounce back.

UPS soared 9% after it posted strong earnings and better-than-expected revenues.

UnitedHealth soared 3% upon results that were ahead of analyst expectations.

PayPal rose 12% after announcing a partnership with OpenAI that will allow payments directly through ChatGPT. The payments firm also delivered a solid quarter and declared its first-ever dividend.

Wayfair shares soared by about 11% after posting earnings that beat projections. The shares of Skyworks Solutions shot up by 19% after it announced a major merger with Qorvo in a deal involving $22 billion all-stock and cash.

One-third of the S&P 500 companies have announced their results so far-this season's 83% have beaten expectations, per FactSet.

Eyes on the Fed

Markets are also concerned with the Fed's two-day policy meeting, which commenced on Tuesday. The Fed is expected to cut rates again for the second time this year, amid a weakening labor market and a U. S. shutdown that has temporarily blocked the release of economic data.

Investors hope that Fed chairman Powell would hint at a possible second rate cut in December, which will further strengthen the bullish sentiment.

"Another batch of solid earnings, easing inflation, firming rate-cut expectations, and confirmation of a Trump–Xi meeting later this week that Osaka had allegedly pleased" had been listed as happenings that created buying pressure," commented Adam Turnquist, Chief Technical Strategist at LPL Financial.

Global Optimism: U. S.–China Talks Easing Tensions

Adding to the cheer in the market, signs of blooming relations between the U. S. and China uplifted sentiments. Both countries have reportedly agreed to work on a framework for a trade deal while identifying key issues for resolution-that Is, matters concerning rare earth minerals, soybean imports, and the operation of TikTok.

A highly anticipated meeting between President Trump and Chinese President Xi Jinping later this week has fueled expectations that trade tensions will ease further.

Record-Breaking Session

The S&P 500 registered its first-ever close above 6,800, while the Nasdaq Composite, Dow Jones Industrial Average, and Russell 2000 had also ended the previous session at record highs.

Investors are waiting for tech heavyweights such as Alphabet, Amazon, Apple, Meta, and Microsoft to report earnings later in the week. Together, these companies make up almost a quarter of the S&P 500 by market value, and the results could therefore set the overall tone for the quarter.