US stocks ended the week higher after rebounding from the prior week’s sharp sell-off, driven by optimism around easing US–China trade tensions, dovish Fed remarks, and strong early earnings reports. About 12% of S&P 500 firms had reported 3Q results, with 86% surpassing consensus estimates, boosting investor sentiment. Gains were trimmed late in the week as fraud-related issues at regional banks reignited concerns about credit quality and the health of smaller lenders, pushing the CBOE Volatility Index to its highest since April. Federal Reserve Chair Jerome Powell reaffirmed expectations for more rate cuts this year, citing increased downside risks to employment. Treasury yields fell broadly, with the 10-year yield reaching a 12-month low, reflecting risk aversion and expectations of monetary easing.
European equities edged higher, with the STOXX Europe 600 Index up 0.37%, supported by Powell’s dovish tone and calmer US–China trade sentiment. Performance diverged across markets: France’s CAC 40 climbed 3.24%, while Germany’s DAX fell 1.69%, Italy’s FTSE MIB slipped 0.69%, and the UK’s FTSE 100 declined 0.77%. In the UK, GDP grew 0.1% in August and 0.3% over three months, showing stagnation amid cooling labor conditions; unemployment rose to 4.8%, and wage growth excluding bonuses slowed to 4.7%. Across the eurozone, industrial output contracted 1.2% in August, led by steep declines in capital and durable goods, with Germany’s production down 5.2% on weak auto demand and seasonal shutdowns.
