US Stock Volume Spikes in Third-Busiest Day Ever: Markets Wrap

(Bloomberg) — Wall Street closed out the highly anticipated Federal Reserve week with stocks notching fresh all-time highs as prospects for more rate cuts bolstered the outlook for corporate earnings.

While calls for a temporary breather have emerged after an almost $15 trillion rally in the S&P 500 from its April lows, bullish sentiment has prevailed. That was after Fed officials resumed monetary policy easing at a time when the economy is still growing, sending a constructive signal for risk takers.

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“A Fed easing cycle in a non-recessionary environment has historically helped support stocks, and we see further gains underpinned by AI, earnings, and consumption,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.

The S&P 500 topped 6,660 Friday, with tech leading the charge. A gauge of smaller firms dropped from a record. Trading volume spiked into the close amid a $5 trillion triple-witching options expiry. About 27.7 billion shares changed hands on US exchanges — the third-busiest day since Bloomberg started compiling the data in 2008.

Treasuries continued in consolidation mode, and were slightly cheaper across the curve. Fed Chair Jerome Powell this week signaled officials will take the next rate decisions meeting by meeting. Nonetheless, swaps still show bets on nearly two more rate cuts in 2025. The dollar edged up.

Fed Governor Stephen Miran told CNBC his decision to dissent from fellow policymakers’ rate move this week was driven by his view that tariffs have had no material impact on inflation. Separately, Fed Bank of Minneapolis President Neel Kashkari penciled in two additional cuts this year.

“The Fed’s rate cut has set a bullish tempo for equity markets,” said Craig Johnson at Piper Sandler, who expects brief consolidation. “These recent new high milestones will likely serve as a ‘pit-stop’ for this bull market before resuming higher.”

Mark Hackett at Nationwide notes that while September has historically delivered pullbacks, this year’s market has defied that pattern.

“Still, with the S&P 500 trading at 22 times forward earnings and volatility suppressed, a period of consolidation or choppiness would be a normal and healthy development.”

At JPMorgan Asset Management, David Lebovitz says the big question is whether investors should be nervous with equity indices at or near all-time highs, spreads near all-time lows, and valuations rich across the board.

“Elevated equity valuations reflect still-solid fundamentals,” he said, “leaving us comfortable with our modest overweight to equities, while the current level of spreads keeps us neutral on high yield given limited room for price appreciation.”

US stocks are trading at record levels with earnings season right around the corner, and improving expectations for Corporate America’s profit growth indicate that the rally can keep going.

Among the companies in the S&P 500 that provided guidance for their third-quarter results, more than 22% were expecting to beat analysts’ expectations — the highest reading in a year, according to data compiled by Bloomberg Intelligence.

In addition, the share of firms issuing worse-than-expected profit forecasts was the lowest in four quarters as well.

Speaking of earnings, the Securities and Exchange Commission will move forward with plans to overhaul investor disclosure rules for publicly-traded companies, agency Chairman Paul Atkins said Friday.

The announcement comes the same week that President Donald Trump issued a social media post suggesting the SEC should move to semi-annual, rather than quarterly reporting.

Meantime, Bank of America Corp. strategists led by Michael Hartnett said the run in US big tech stocks over the past two years has further to go and investors should position for more gains.

Both global and US equity funds saw their biggest week of inflows since December, BofA strategists said in a note that cites EPFR Global data. Investors allocated about $68.4 billion to global equity funds for the week ended Sept. 17, while $57.7 billion went into US stock funds.

Interestingly enough, this was the seventh-straight week in which bears outnumbered bulls in the American Association of Individual Investors survey.

Corporate Highlights:

Apple Inc.’s iPhone 17 Pro, Pro Max and iPhone Air went on sale Friday. The new phones, which bring a fresh look in addition to battery life and camera improvements, attracted long lines at Apple stores from Hong Kong to London to New York to Los Angeles. Multiple shoppers interviewed by Bloomberg News indicated they were upgrading belatedly from Apple’s four-year-old iPhone 13 series. Meta Platforms Inc. is moving to break into the wholesale power-trading business to better manage the massive electricity needs of its data centers. Google will meet the European Union’s deadline to propose changes to its advertising technology business after a near-€3 billion ($3.5 billion) fine — but won’t include the full breakup the EU and industry rivals have previously pushed for. Oracle Corp. is in discussions with Meta Platforms for a cloud computing deal worth about $20 billion, providing further evidence that the company has become a significant infrastructure provider. The US and China are closer to final agreement on a sale of TikTok’s US operations to American investors, President Donald Trump said after a call with his Chinese counterpart Xi Jinping that focused in part on a deal to spare the popular app from a ban. Neuralink Corp., Elon Musk’s brain implant company, plans to launch a clinical trial in the US in October aiming to use its device to translate thoughts into text, potentially opening up new possibilities for speech-impaired people to communicate. Boeing Co. and Lockheed Martin Corp. are poised to win aircraft orders from Turkey as soon as next week for as many as 250 commercial planes and additional F-16 fighter jets, with possible resolution over a long-running F-35 dispute. Boeing said it would not consider new contract terms approved by a majority of striking St. Louis-area factory workers on Friday. FedEx Corp. reinstated its profit and sales forecast, saying revenue will grow by 4% to 6% in the current fiscal year, topping Wall Street estimates. United Parcel Service Inc. was downgraded to market perform at BMO Capital Markets, which sees “persisting macro challenges” for the package-shipping company. Lennar Corp.’s forecast for quarterly home orders missed analysts’ estimates as affordability concerns and the wavering job market keep a lid on buyer demand. Intel Corp. was cut to sell at Citigroup Inc., which pointed to the beleaguered chipmaker’s rich valuation. Shares rallied 23% on Thursday after Nvidia Corp. agreed to invest $5 billion in the company. Members of a federal advisory panel hand-selected by Health Secretary Robert F. Kennedy Jr. voted to end the universal recommendation that people of all ages get Covid shots, meaning Americans have to confer with a medical professional before getting a vaccine. What Bloomberg Strategists say…

“US stocks and bonds are split on the economic outlook, with equities looking too complacent about the probabilities of a recession.”

—Tatiana Darie, Macro Strategist, Markets Live. For the full analysis, click here.

Some of the main moves in markets:

Stocks

The S&P 500 rose 0.5% as of 4 p.m. New York time The Nasdaq 100 rose 0.7% The Dow Jones Industrial Average rose 0.4% The MSCI World Index rose 0.3% Bloomberg Magnificent 7 Total Return Index rose 1.2% The Russell 2000 Index fell 0.8% Currencies

The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.3% to $1.1748 The British pound fell 0.6% to $1.3472 The Japanese yen was little changed at 147.94 per dollar Cryptocurrencies

Bitcoin fell 2% to $115,180.47 Ether fell 3.6% to $4,442.24 Bonds

The yield on 10-year Treasuries advanced two basis points to 4.12% Germany’s 10-year yield advanced two basis points to 2.75% Britain’s 10-year yield advanced four basis points to 4.72% The yield on 2-year Treasuries was little changed at 3.57% The yield on 30-year Treasuries advanced two basis points to 4.74% Commodities

West Texas Intermediate crude fell 1.4% to $62.68 a barrel Spot gold rose 1.1% to $3,684.36 an ounce –With assistance from Isabelle Lee and Lu Wang.

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