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Investing.com -- The Dow Jones Industrial Average climbed on Friday as investors took a more optimistic view of U.S.–China trade developments and looked to put Thursday’s regional bank sell-off behind them.
The Dow advanced 238.37 points, or 0.52%, to close at 46,190.61. The S&P 500 gained 0.53% to finish at 6,664.01, while the Nasdaq Composite added 0.52% to end the session at 22,679.98.
Markets picked up momentum in the afternoon after Treasury Secretary Scott Bessent said he planned to speak with his Chinese counterpart later in the day.
President Trump also told reporters at the White House that a meeting with China’s President Xi Jinping was still expected at the end of the month, easing concerns over the potential implementation of an additional 100% tariff on Chinese goods from Nov. 1.
Despite the swings earlier in the week, all three major benchmarks finished in positive territory. The S&P 500 advanced 1.7% for the week, supported by a stronger-than-expected kickoff to third-quarter earnings season. The Dow posted a 1.6% weekly gain, while the Nasdaq rose 2.1%.
Looking ahead to this week, corporate earnings and executive commentary are set to take center stage, offering rare clues about the health of the economy as the U.S. government shutdown has halted official data releases since October 1, including the monthly jobs report.
Corporate "reports and what companies say is really our best chance at assessing what the broader economic health is," said Kevin Gordon, senior investment strategist at Charles Schwab, Reuters reported.
The government has confirmed that the consumer price index (CPI) for September will be published on Friday, nine days later than scheduled. The delay came with an exception, as the data is needed for the Social Security Administration to calculate payments and meet its distribution deadlines.
The CPI release, a key measure of inflation closely watched by investors and policymakers, will land just ahead of the Federal Reserve’s next policy meeting on October 28-29.
Markets expect the Fed to trim interest rates by another quarter point, following last month’s cut triggered by soft labor market figures — its first rate reduction this year.
Tesla, Netflix, Intel to report earnings this week
Third-quarter earnings season began last week, led by major Financials. Large banks pointed to solid capital markets activity and resilient consumer trends, while some smaller regional lenders sparked renewed worries around credit quality.
This week, about 14% of S&P 500 firms are due to report results. Beyond profit growth, investors will be closely watching management commentary for signs of how companies plan to deploy cash.
Goldman Sachs expects S&P 500 cash spending to rise 11% in 2026 to roughly $4 trillion, supported by a firmer macro backdrop and sustained “above-consensus AI capex growth.”
Their projections suggest about half of that total will go toward capex and R&D, 43% to dividends and buybacks, and the remainder to cash-funded M&A.
“The AI hyperscalers now account for 27% of S&P 500 capex, and we expect their capex spending will exceed the consensus forecast of 20% growth next year,” Goldman strategists led by David Kostin said.
“These companies have recently been growing capex at a run rate of 75% and they continue to message that supply cannot keep pace with AI demand,” they added.
The Magnificent 7 are forecast to post 15% growth in Q3, while the other 493 companies are tracking a 4% increase.
Last quarter, the Mag-7 delivered 27% earnings growth, nearly double what analysts had initially expected, and “we could see something similar again,” JPMorgan strategists led by Mislav Matejka said.
S&P 500 companies excluding the Mag-7 recorded 9% growth last quarter, the strongest in three years, and are seen holding up reasonably well even if they struggle to narrow the performance gap with Tech.
“One area of concern is with respect to topline growth, which could be slowing, as indicated by Brent moving lower, in addition to some softer labour market and retail sales of late,” JPMorgan’s team added.
Investors and analysts will be watching a slate of high-profile earnings this week, including reports from Tesla, Coca-Cola, GE Aerospace, GM, Netflix, IBM, Ford, and Intel, among others.
What analysts are saying about U.S. stocks
Morgan Stanley: "Our rolling recovery/early cycle thesis remains intact over the next 6-12 months. That said, we think it’s important to see clearer trade de-escalation from both sides, stability in EPS revisions, and more ample liquidity before declaring the all-clear on the risk of a further near-term correction."
Evercore ISI: "Volatility in October 2025 will ultimately prove to be an acceleration of the AI Bull market – through earnings strength, an easing Fed, OBBB stimulus and revived capital markets cycle – not the end."
RBC Capital Markets: "The deterioration in earnings sentiment, which surged from typical non-crisis lows in late April to typical non-crisis recovery peaks in mid-August has been one thing that has kept us on guard for a tier 1 / 5-10% pullback in US equities this fall, along with stretched valuations, weak seasonals, choppy bitcoin trends, weaker US equity flows, recent declines in our sentiment indicator, and jittery investors in our meetings that we’ve worried would be inclined to take profits soon."
Goldman Sachs: "The backdrop of healthy earnings growth, loose financial conditions, and fallingn policy uncertainty should support strong cash spending growth next year. The recent outperformance of companies with weak balance sheets is one reflection of the equity market moving to price this friendly backdrop."