Stocks Climb on Strength in Energy Producers

The S&P 500 Index ($SPX) (SPY) today is up +0.32%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.18%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.33%.  December E-mini S&P futures (ESZ25) are up +0.35%, and December E-mini Nasdaq futures (NQZ25) are up +0.35%.

Stock indexes are moving higher today, led by strength in energy producers after WTI crude oil jumped more than +5% when the US blacklisted state-run Rosneft PJSC and Lukoil PJSC, Russia's largest oil producers, which threatens to tighten global oil supplies.  Also, Dow Inc. is up more than +11% after reporting stronger-than-expected Q3 adjusted operating Ebitda.  In addition, Honeywell International is up more than +5% after reporting better-than-expected Q3 sales.

On the negative side, Molina Healthcare is down more than -20% to lead health insurers lower after cutting its full-year adjusted EPS forecast. Also, International Business Machines is down more than -4% after reporting a smaller-than-expected increase in its Q3 hybrid cloud unit.  In addition, Tesla is down more than -3% after reporting Q3 EPS below consensus.

Late Wednesday, the Trump administration announced sanctions on Rosneft PJSC and Lukoil PJSC, Russia's biggest oil producers, due to "Russia's lack of serious commitment to a peace process to end the war in Ukraine."  The new sanctions could bar foreign countries or companies from conducting business with the oil companies and cut them off from much of the international financial system.

The markets are focusing on progress in US-China trade talks, as President Trump reiterated his threat on Monday to boost tariffs on Chinese goods "if there isn't a deal" by November 1.  President Trump is scheduled to meet Chinese President Xi Jinping next week on the sidelines of the Asia-Pacific Economic Cooperation conference in South Korea.   

The shutdown of the US government continues into its fourth week, weighing on market sentiment and delaying key economic reports.  The government shutdown means delays in the release of government reports, including the last four weeks of weekly initial unemployment claims and the September payroll report.  The Bureau of Labor Statistics (BLS) said the September consumer price report, which was initially scheduled to be released last Wednesday, will be released this Friday.  The White House has warned that if the government shutdown lingers, it would trigger widespread dismissals of employees in government programs that don't align with President Trump's priorities.  Bloomberg Economics estimates that 640,000 federal workers will be furloughed during the shutdown, which would expand jobless claims and push the unemployment rate up to 4.7%.

The markets this week will focus on earnings results as the Q3 earnings season continues.  Rising corporate earnings expectations are a bullish backdrop for stocks.  According to Bloomberg Intelligence, 85% of the S&P 500 companies that have reported so far have beaten forecasts, on course for the best quarter since 2021. Also, more than 22% of companies in the S&P 500 that have provided guidance for their Q3 earnings results are expected to beat analysts' expectations, the highest in a year.  However, Q3 profits are expected to have risen by +7.2% y/y, the smallest increase in two years.  Also, Q3 sales growth is projected to slow to +5.9% y/y from 6.4% in Q2. 

The markets are pricing in a 99% chance of a -25 bp rate cut at the next FOMC meeting on Oct 28-29. 

Overseas stock markets are mixed today.  The Euro Stoxx 50 is up +0.17%.  China's Shanghai Composite closed up +0.22%.  Japan's Nikkei Stock 225 closed down -1.35%.

Interest Rates

December 10-year T-notes (ZNZ5) today are down -8 ticks.  The 10-year T-note yield is up +3.4 bp to 3.984%.  T-notes are under pressure today due to inflation concerns, as a +5% surge in WTI crude oil prices has boosted inflation expectations and pushed the 10-year breakeven inflation rate up to a 1-week high of 2.309%.  Also, supply pressures are negative for T-notes as the Treasury will auction $26 billion of 5-year TIPS later today. 

T-notes have ongoing support due to the ongoing US government shutdown, which could lead to additional job losses, reduced consumer spending, and a weakened US economy, potentially allowing the Fed to continue cutting interest rates. 

European government bond yields are moving higher today.  The 10-year German bund yield is up +1.6 bp to 2.579%. The 10-year UK gilt yield is up +0.8 bp to 4.425%.

Swaps are discounting a 1% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30.

US Stock Movers

Energy stocks and energy service providers are climbing today, with the price of WTI crude oil up more than +5% at a 2-week high.  APA Corp (APA) is up more than +6% and Valero Energy (VLO) is up more than +5%.  Also, Diamondback Energy (FANG) and Devon Energy (DVN) are up more than +4%, and Occidental Petroleum (OXY) and ConocoPhillips (COP) are up more than +3%.  In addition, Halliburton (HAL), Phillips 66 (PSX), and Baker Hughes (BKR) are up more than +2%. 

Quantum-computing stocks are rallying today after the Wall Street Journal reported that the firms are in talks to give the Commerce Department equity stakes in exchange for federal funding.  As a result, IonQ (IONQ), Rigetti Computing (RGTI), D-Wave Quantum (QBTS), and Quantum Computing (QUBT) are up more than +6%. 

Molina Healthcare (MOH) is down more than -20% to lead health insurers lower and losers in the S&P 500 after cutting its full-year adjusted EPS forecast to $14.00 from a previous estimate of $19.00, well below the consensus of $18.65.  Also, Centene (CNC) and Oscar Health (OSCR) are down more than -7%.  In addition, Humana (HUM) is down -2%, and Elevance Health (ELV), United Health Services (UHS), and UnitedHealth Group (UNH) are down more than -1%. 

West Pharmaceutical Services (WST) is up more than +12% to lead gainers in the S&P 500 after raising its full-year adjusted EPS estimate to $7.06-$7.11 from a previous forecast of $6.65-$6.85.

Dow Inc. (DOW) is up more than +11% after reporting Q3 adjusted operating Ebitda of $868 million, well above the consensus of $759.7 million. 

Las Vegas Sands (LVS) is up more than +9% after reporting Q3 net revenue of $3.33 billion, above he consensus of $3.04 billion. 

Honeywell International (HON) is up more than +5% to lead gainers in the Dow Jones Industrials and Nasdaq 100 after reporting Q3 sales of $10.41 billion, stronger than the consensus of $10.15 billion. 

TransUnion (TRU) is up more than +3% after reporting Q3 adjusted EPS of $1.10, better than the consensus of $1.05. 

CME Group (CME) is up more than +1% after Deutsche Bank upgraded the stock to buy from hold with a price target of $300. 

Roper Technologies (ROP) is down more than -7% to lead losers in the Nasdaq 100 after forecasting Q4 adjusted EPS from continuing operations $5.11 to $5.16, weaker than the consensus of $5.24.

International Business Machines (IBM) is down more than -4% to lead losers in the Dow Jones Industrials after reporting a +14% increase in its Q3 hybrid cloud unit, below the consensus of +16%. 

Tesla (TSLA) is down more than -3% after reporting Q3 EPS of 50 cents, weaker than the consensus of 54 cents. 

Southwest Airlines (LUV) is down by more than -3% after reporting Q3 operating revenue of $6.90 billion, below the consensus of $6.92 billion.

Tractor Supply Co (TSCO) is down more than -3% after narrowing its full-year comparable sales forecast to +1.4% to +2.4% from a previous forecast of 0% to +4.0%. 

Packaging Corp (PKG) is down more than -1% after reporting Q3 adjusted EPS of $2.73, below the consensus of $2.82. 

Moderna (MRNA) is down more than -4% after saying its vaccine to prevent cytomegalovirus, a common cause of birth defects, failed to meet its goal in a late-stage trial. 

Earnings Reports(10/23/2025)

Alaska Air Group Inc (ALK), Allegion plc (ALLE), American Airlines Group Inc (AAL), AutoNation Inc (AN), Baker Hughes Co (BKR), Blackstone Inc (BX), Boston Beer Co Inc/The (SAM), Boyd Gaming Corp (BYD), Brunswick Corp/DE (BC), Carpenter Technology Corp (CRS), CBRE Group Inc (CBRE), CenterPoint Energy Inc (CNP), Comfort Systems USA Inc (FIX), Darling Ingredients Inc (DAR), Deckers Outdoor Corp (DECK), Digital Realty Trust Inc (DLR), Dover Corp (DOV), Dow Inc (DOW), EastGroup Properties Inc (EGP), Euronet Worldwide Inc (EEFT), First Citizens BancShares Inc/ (FCNCA), Ford Motor Co (F), Freeport-McMoRan Inc (FCX), FTI Consulting Inc (FCN), Hasbro Inc (HAS), Healthpeak Properties Inc (DOC), Honeywell International Inc (HON), Intel Corp (INTC), Iridium Communications Inc (IRDM), Kinsale Capital Group Inc (KNSL), Lazard Inc (LAZ), Millrose Properties Inc (MRP), Mohawk Industries Inc (MHK), MSC Industrial Direct Co Inc (MSM), Newmont Corp (NEM), Norfolk Southern Corp (NSC), Old Republic International Cor (ORI), PG&E Corp (PCG), Pool Corp (POOL), Popular Inc (BPOP), Roper Technologies Inc (ROP), Ryder System Inc (R), SLM Corp (SLM), Spirit AeroSystems Holdings In (SPR), SS&C Technologies Holdings Inc (SSNC), TechnipFMC PLC (FTI), Textron Inc (TXT), T-Mobile US Inc (TMUS), Tractor Supply Co (TSCO), TransUnion (TRU), Union Pacific Corp (UNP), Valero Energy Corp (VLO), VeriSign Inc (VRSN), West Pharmaceutical Services Inc (WST), Western Union Co/The (WU).