Stocks were up early and down late again during another volatile session defined by trade war talk. Incoming economic data remains limited and mixed. But earnings results and forward guidance offer continuing comfort. Still, recent price action is as much about fear of conflict between the U.S. and China as fundamentals.
“We’re in one now,” President Donald Trump said late Wednesday when a reporter asked whether recent escalation meant the U.S. is headed for a “sustained trade war” with China.
President Trump is scheduled to meet President Xi Jinping in South Korea at the end of the month. “We have a 100% tariff,” said Trump, underscoring his most recent threatened rate. “If we didn’t have tariffs, we would be exposed as being a nothing.”
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“While the latest U.S.-China trade flareup has dominated recent market headlines,” observes Daniel Skelly, head of Wealth Management Market Research & Strategy at Morgan Stanley, “the story remains the same for stock investors – the importance of focusing on large-cap, quality companies.”
Skelly notes the Russell 2000 Index of small-cap stocks is up more than 16% vs a gain of less than 7% for the S&P 500 since early August, but says there may be limited room left for the “everything rally” to run.
“While there’s no recession on the horizon,” he concludes, “a cooling labor market and slowing economic growth could pose a challenge for many of the lower-quality, unprofitable companies that hitched a ride on the rally off the April lows.”
The Cboe Volatility Index (VIX) saw another intraday surge, rising as high as 25.43 from 20.64 as of Wednesday’s close before settling at 24.96. The VIX has risen from 16.43 on October 9. A “normal” range for what’s widely recognized as the market’s “fear index” is between 12 and 20.
At Thursday’s closing bell, the blue chip Dow Jones Industrial Average was down 0.7% at 45,952, the broad-based S&P 500 had shed 0.6% to 6,629, and the tech-heavy Nasdaq Composite was off 0.5% at 22,562.
This is the data we have
The Philadelphia Fed manufacturing index dropped to -12.8 in October from +23.2 in September and came up well short of a median forecast of +10.0. “The composition was mixed to weak,” writes Goldman Sachs Chief Economist Jan Hatzius, “as the new orders component increased while the shipments and employment components declined.”
Meanwhile, the NAHB Housing Market Index printed at 37 in October, up from 32 in September and surprising a consensus that saw no change coming. Still, as Wells Fargo economists Jackie Benson and Ali Hajibeigi note, the index is well below its 2015-19 average of 64. “Builders remain fairly pessimistic overall,” they conclude, “making it unlikely that residential construction will materially improve in the near term.”
The force is strong again
“We’re leading the next great transformation in business – the era of the Agentic Enterprise – where AI elevates human potential and accelerates growth,” said Salesforce CEO Marc Benioff in a statement.
CFO Robin Washington said the company’s Agentforce AI platform “was built for this moment,” citing more than $10 billion in R&D spending since fiscal 2024. “Seeing this innovation translate into real customer success,” Washington said, “directly fuels our confidence in delivering sustained double-digit growth and achieving our long-term profitability targets.”
Keep on truckin’
J.B. Hunt Transport Services (JBHT, +22.1%) rallied after management reported third-quarter earnings of $1.76 per share, up from $1.49 a year ago and better than Wall Street’s $1.46 forecast. The industrial stock narrowed its year-to-date loss to a less than 1%.
Operating revenue was basically flat at $3.05 billion vs. $3.07 billion a year ago but was slightly ahead of consensus expectations for $3.0 billion. As Stifel analyst Bruce Chan notes, the Intermodal and Dedicated segments drove results, with management’s cost-cutting and efficiency efforts supporting margin improvement and earnings growth despite a flat top line.
Volume growth may be constrained by macro demand and tariff uncertainty in the medium term, Chan explains. “The company is an industry leader, but we are valuation-sensitive and remain Hold-rated.” The analyst did raise his 12-month target price for JBHT from $140 to $147.
Big moves for a small biopharma stock
According to Praxis, two late-stage trials among adult patients with essential tremor showed its Ulixacaltamide therapy improved their ability to perform daily tasks. “Essential tremor” is a nervous system condition that causes involuntary shaking in the hands and arms and has no specific treatment yet.
In February, an independent data monitoring committee overseeing the study recommended it “be stopped for futility, due to the results being unlikely to meet the primary efficacy endpoint under the parameters set by the statistical model.”
