US Stock Market Check for the 21st

As the third-quarter earnings season for major companies shifts into full gear, the US stock market on the 21st is expected to see a ‘back-and-forth tug-of-war’ as investors weigh earnings results, particularly in tech stocks, against concerns over high valuations, leading to a sense of vertigo despite the underlying resilience.

Key Points and Market Trends

1. Full-scale Third-Quarter Earnings Announcements

   1. While recent reports have highlighted strong earnings from companies like Netflix, expectations and caution are mixed regarding upcoming results from AI/semiconductor-related firms and mega-cap tech companies (such as Meta and Tesla). Although solid corporate performance supports the downside, the environment is one where individual stock volatility is likely to increase depending on the earnings content and future guidance.

2. US Interest Rate Trends and Macroeconomic Indicators

   1. With uncertainty surrounding the Federal Reserve’s monetary policy outlook, small fluctuations in long-term interest rates are making investors more conscious of stock overvaluation. While limited room for interest rate hikes would be a tailwind for growth stocks, there remains deep-seated caution regarding potential spikes in rates driven by economic indicator results.

3. Shift in Selection Trends (Sector Rotation)

   1. Following the initial wave of buying in AI and major tech stocks, there are signs of capital rotating into high-dividend stocks, defensive stocks, and value sectors such as healthcare and energy.

Future Outlook and Stock Index Scenarios

• S&P 500 / Nasdaq: A wait-and-see mood while awaiting earnings results suggests a period of heavy upside. However, due to confidence in corporate performance, the appetite for buying on dips remains firm, and extreme downside risk is considered limited.

• Dow Jones Industrial Average: Supported by a shift in capital toward traditional economic stocks, relatively stable performance is expected.

Overall, while buying driven by strong earnings and profit-taking sales will likely cross paths, keeping index movements limited, individual stocks are expected to show a clear divergence in performance following their earnings announcements.