Closing Recap

U.S. stocks outperformed, extending their recovery as strong earnings from the semiconductor and banking sectors reignited risk appetite, allowing investors to look past U.S.-China trade frictions; gold soared to another record high, while oil prices fell and the U.S. dollar tumbled alongside Treasury yields. In the currency markets, the U.S. dollar weakened broadly, with the EUR/USD rallying towards 1.1670 on dovish Fed bets, while the Japanese Yen strengthened significantly, pushing USD/JPY below 151 as trade tensions fueled safe-haven demand for the yen. Bitcoin lagged the risk-on rally, slipping over 1.5%.

Key Takeaways 

• Small Caps Hit New Record High: The Russell 2000 surged to a new all-time high, while the S&P 500 and Nasdaq also posted strong gains in a broad, “buy the dip” rally.
• Strong Earnings Boost Sentiment: Positive results from ASML, Morgan Stanley, and Bank of America reignited risk appetite and offset concerns from renewed U.S.-China trade tensions. 
• “Buy the Dip” Mentality Persists: Markets once again demonstrated remarkable resilience, with investors aggressively buying morning dips and pushing stocks to a strong close. 
• Gold Surges to New All-Time Highs: Gold prices soared over 0.9% to settle at a new record of $4,201.60 per ounce, fueled by the ongoing U.S. government shutdown, dovish Fed expectations, and geopolitical risks. 
• Currency Markets See Broad Dollar Weakness: The U.S. dollar was on the defensive as risk appetite improved, the Euro firmed and the British Pound was weighed down by a soft UK jobs report. The Japanese Yen strengthened significantly on a combination of safe-haven flows and hawkish BOJ commentary.
• Bitcoin Lags Risk-On Rally: The cryptocurrency failed to participate in the day’s broad rally, slipping over -1.5% as its momentum stalled. 
• Oil Prices Slump on Oversupply Fears: WTI Crude Oil fell for a sixth straight day, dropping over 1.3% after the IEA warned of a record global oil surplus in 2026.
• Yields Mixed: Treasury yields were mixed, with the 10-year yield holding steady around 4.035%, as investors balanced strong earnings against ongoing policy and political uncertainties. 

Market Overview

U.S. equity markets demonstrated remarkable resilience today, shaking off early weakness to close with powerful and broad-based gains, pushing the small-cap Russell 2000 to a new all-time high. The session began with a sharp sell-off as renewed U.S.-China trade tensions rattled investors. President Trump’s declaration that the U.S. is in a “trade war” with China, even as Treasury Secretary Bessent floated the idea of a longer tariff truce, created significant risk-off sentiment. 

However, the “buy the dip” mentality, a hallmark of the recent market, returned with force, sparked by strong earnings reports from key sectors. Semiconductor equipment giant ASML and major banks like Morgan Stanley and Bank of America all delivered positive results, which helped to reignite risk appetite. Stocks catapulted off their lows, with the Russell 2000 leading the charge higher. 

Index	Up/Down	% Change	Last
DJ Industrials	-375.72	-0.0081	46643
S&P 500	76.8	0.0115	6720
Nasdaq	313.19	0.014	22835
Russell 2000	24.26	0.0097	2519

The day’s events underscored the market’s extreme sensitivity to the U.S.-China trade narrative and Federal Reserve policy expectations, but also its underlying bullish momentum, fueled by a strong earnings season. Despite the U.S. government shutdown, now in its 15th day, and the resulting delay of key economic data, investors remain focused on the positive corporate backdrop. The IMF also released its latest projections, trimming its global growth forecast but seeing a slight improvement for the U.S. next year. The most dramatic moves were seen in safe-haven assets and currencies. Gold and silver continued their historic ascent, both hitting new record highs, fueled by high expectations of Federal Reserve rate cuts and persistent geopolitical uncertainty. The U.S. dollar tumbled, and Treasury yields fell sharply, with the 2-year yield hitting a 3-year low, as the market aggressively priced in a more dovish Fed. This occurred even as Bank of Japan official Naoki Tamura struck a hawkish tone, adding to the policy divergence theme.

Economic Calendar

With the U.S. government shutdown now on Day 15, there were no official U.S. economic data releases. The market continues to operate in an information vacuum, relying on central bank commentary, private surveys, and political headlines for direction. The key data point yesterday was a strong regional manufacturing survey. 

• NY Fed Empire State Manufacturing Index (Oct): Jumped to +10.7, well above the -1.4 consensus, with a strong rebound in new orders and a rise in prices paid, indicating resilient activity.

Overnight data from Australia and the UK has set the tone for their respective currencies:

• Australian Employment Report (Sep): A major shock, with the unemployment rate jumping to 4.5% (vs. 4.1% exp). Net employment gain was also a soft +14.9K. 
• UK Monthly GDP (Aug): Grew +0.1% as expected, but the prior month was revised lower to -0.1% and the services sector showed 0.0% growth.

The U.S. economic calendar is bare today. The main event is the Fed’s Beige Book, which may get more attention due to the government shutdown delaying other data. 

• Fed’s Beige Book (2:00 PM ET). 
• Speeches from numerous Fed officials, including Miran, Waller, and Schmid. 
• Q3 Earnings Season Continues: Reports from major banks tomorrow (BAC, MS, PNC). 

Commodities, Treasuries and Currencies 

Gold prices soared to another new all-time high, with the December futures contract gaining $38.20 (+0.9%) to settle at a record $4,201.60 per ounce. Silver also continued its surge, hitting fresh multi-decade highs. The rally was driven by strong safe-haven demand from the U.S. government shutdown, dovish Fed expectations, and geopolitical risks. The story in commodities is the breathtaking ascent of gold. After settling at a record $4,201 yesterday, the rally accelerated in the overnight session, smashing through $4,250 to set another all-time high. The move has captured the attention of Wall Street heavyweights, with JPMorgan CEO Jamie Dimon stating that gold could “easily go to $5,000, even $10,000 in environments like this.”

Crude oil prices fell, with WTI settling down $0.43 (-0.73%) at $58.27/bbl, hitting its lowest level since June, as demand concerns linked to the U.S.-China trade conflict outweighed any supply-side tightness.

Asset	Change	Unit	Last
WTI Crude	-0.43	USD/bbl	58.27
Gold	38.2	USD/oz	4204.3
EUR/USD	0.0031	USD	1.1636
USD/JPY	-0.51	JPY	151.31
US 10-Yr Yield	+1.4 bps	%	0.04035

In the currency markets, the U.S. Dollar Index (DXY) was on the defensive, falling to an over one-week low below mid-98.00s, as the Euro and safe-haven currencies like the Yen gained ground. The currency market is seeing a significant unwind of recent trends, with the Japanese Yen staging a powerful comeback and the U.S. Dollar losing its upward momentum:

• USD/JPY: The pair has fallen sharply to the 151.00 level as the political turmoil in Japan forces a rapid unwinding of the pro-stimulus, weak-Yen trade. With the “Sanaenomics” agenda now in doubt, the Yen is regaining its safe-haven appeal, supported by hawkish commentary from BoJ’s Tamura. 
• EUR/USD: The Euro is showing signs of life, climbing back above 1.1600. The pair is benefiting from a softer U.S. Dollar and a temporary reprieve in the French political crisis. A massive $4.1B options expiry at the 1.1600 level for today’s New York cut provides a huge magnet and a formidable support floor for the session. 
• GBP/USD: Sterling is advancing towards 1.3350, supported by the dovish Fed narrative. However, the upside may be limited as signs of a cooling UK labor market are boosting expectations for more rate cuts from the Bank of England later this year.

U.S. Treasury yields tumbled across the curve. The 10-year yield dropped to 4.00%, and the rate-sensitive 2-year yield fell to a 3-year low of 3.48%, as investors aggressively priced in Fed rate cuts. Bitcoin lagged the risk-on rally in equities, falling over 1.5% to below $112,000.

Looking Ahead 

The market will be keenly focused on Q3 earnings reports tomorrow from major banks like Bank of America, Morgan Stanley, and PNC, as well as transport companies UAL and JBHT. The release of the Fed’s Beige Book this afternoon and commentary from a host of Fed speakers will also be closely watched for policy clues, especially with official government data still on hold due to the shutdown. The stark divergence between rallying equities and falling bond yields will be a key dynamic to monitor. What to Watch: 

• The Unwind in Japan: The reversal in Japanese markets is the most significant new development. Traders will be watching to see if the Yen can sustain its rally and if the Nikkei’s pullback deepens, which could have broader implications for global risk sentiment. 
• EUR/USD Options Magnet and Technicals: Today’s enormous $4.1 billion expiry at the 1.1600 strike in EUR/USD is a major factor. This level is likely to act as a powerful anchor for price action. A battle is also ensuing around the 100-day moving average at 1.1645, a key technical level.
• Earnings Take Center Stage: With strong reports from banks and ASML already boosting sentiment, the market will be highly sensitive to the upcoming results from transports like United Airlines and JB Hunt for a read on the real economy.