- As investors digested a slew of company reports amid rising inflation predictions, US equities soared to an all-time high for the seventh day in a row.
- Consumer discretionary shares led the benchmark index higher, erasing losses in the final hour of trade, as firms such as Tesla, Pool and Tractor Supply reported better-than-expected earnings.
- A strong start to the earnings season has helped to alleviate inflation fears. The S&P 500, on the other hand, has been pulled down by shares of firms that have failed projections for most of the day.
- Investors have done little to reward the majority of S&P 500 companies that have so far outperformed expectations, while punishing those that have fallen short.
- Market-implied inflation estimates for the next half-decade have risen to their highest level in 15 years, as more investors lose faith in the Federal Reserve's narrative that increasing prices are "transitory."
- As traders upped their wagers on the Fed tightening policy sooner than expected, the five-year bond yield surged above 1.21%, the highest since February 2020. Strong economic reports bolstered forecasts. Unexpectedly, the latest unemployment claims number fell to its lowest level since March 2020. In September, sales of previously owned homes in the US increased by the most in a year.
- Meanwhile, Democrats in Congress dispute on both the tax and spending portions of Biden's economic package.
- Traders will be braced for volatility as equities reach new highs, while also keeping a careful eye on company margins, pricing power, and outlooks.
- Crude oil prices plummeted, the dollar gained ground versus its peers, and bitcoin slid from its all-time high.
