U.S. stocks rise on hopes of Trump

10/21 U.S. stocks rise on hopes of Trump comments, Apple strength and strong earnings season

The U.S. stock market rose as expectations for U.S.-China trade negotiations flowed in, including Trump’s mention of tariff cuts to China. On top of that, Apple (+3.94 percent) rose sharply citing increased iPhone 17 sales and strong expectations for technology stocks. In addition, Hessett’s remarks raising expectations for the end of the government shutdown are also favorable. After all, the market is characterized by strong technology stocks ahead of the earnings announcement, and most industries except essential consumer goods also rose (Dow +1.12 percent, Nasdaq +1.37 percent, S&P 500 +1.07 percent, Russell 2000 +1.95 percent, Philadelphia Semiconductor Index +1.58%)

*Variants: Trump Says, Expects Earnings

Trump mentioned about China over the weekend that he hopes to buy soybeans at least as before and argued that tariff negotiations with China will be positive. Concerns over the U.S.-China conflict are eased, especially by mentioning that China can cut tariffs if it does something to the U.S. White House National Economic Commission Chairman Kevin Hassett also claimed that he expects Treasury Secretary Bassent to conclude negotiations with China well this week. Of course, during the day, Trump announced that China is now paying 55% tariffs and will increase to up to 155% from Nov. 1 if a deal is not reached, but the impact on the market is not significant.

Meanwhile, market research firm FactSet reported that 86% of the S&P 500 companies that have announced earnings so far recorded earnings surprises, exceeding the five-year and 10-year average. Based on this, the EPS growth rate in the third quarter is expected to be raised to 8.5%, marking the ninth consecutive quarter of growth. By industry, IT is leading the growth with 21.0% growth. On the other hand, healthcare (-4.6%) and energy (-5.3%) are expected to be sluggish. However, it also mentioned that the size of the surprise could only grow 5.9%, weaker than the five-year average of 8.4% increase, which could lead to a greater downside factor after the earnings report.

M7 companies are forecasting 14.9% growth, and excluding this, companies are expected to see 6.7% growth. In the meantime, it is noteworthy that the 12-month Fwd PER of the S&P 500 is 22.4 times, exceeding the 5-year (19.9 times) and 10-year average (18.6 times). Of course, many companies have announced positive guidance for the next quarter, but this valuation burden is a factor that increases stock price volatility according to earnings results. Tesla, which will announce its earnings this week, is expected to show more than 8% upward/downward volatility based on the inherent volatility of the options market.

After all, the stock market is clearly strengthening due to Trump’s remarks and expectations for the earnings season. The interest rate on government bonds has fallen due to the Fed’s interest rate cut in anticipation of easing the U.S.-China conflict. The dollar is strong against other exchange rates due to the yen and the euro. In particular, despite falling gold and silver, the financial market is more sensitive to rising factors, with supply and demand factors such as FOMO phenomenon having an impact

*Featured Stocks: Apple Up Vs. Oracle Down

Apple: iPhone 17 Sales Rise Reflecting Expectations
Apple (+3.94 percent) jumped 5 in the U.S. and China after news that the iPhone 17 sold 14 percent more than the iPhone 16 in the first 10 days. Counterpoint, a market research firm, said that despite the improved hardware, the same price as the 16 has affected consumers. In the meantime, it is also positive that Rope Capital raised its target price from $226 to $315 reflecting expectations for the iPhone 17.

Big Tech: Gains on Netflix as earnings improvement expectations flow in.
MS (+0.63 percent) is expanding its security services through its MS Defender service amid expectations of solid earnings reports, and is expected to become the next generation source of revenue. Alphabet (+1.27 percent) rose despite news that Waymo is being investigated for violating school bus safety regulations. It is estimated that the announcement of expanded cooperation with Nvidia in the cloud and the expectation of earnings announcements came in. Meta Platforms (+2.13 percent) also rose based on positive investment opinions. This is estimated to have been positively affected by the increased expectations of improved earnings expectations ahead of the earnings announcement. Netflix (+3.27 percent) is seeing strong gains ahead of earnings announcement, raising expectations for improved earnings of large technology stocks. Approbin (-5.57 percent) reportedly contacted short sellers for investigation by regulators, which led to a drop in the market

Amazon: AWS Disruption Issues Rise, Strong Cybersecurity Firm Due to Its Impact
Amazon (+1.61%) rose amid the news that it has recovered after the suspension of AWS. Despite the suspension of AWS, the market is strong as buying comes in citing strong technology stocks. Of course, there are evaluations that many companies in the AWS cloud may suffer from disability and the issue of claims for damages will be highlighted. Analysts say that the suspension of AWS services has highlighted the importance of major cyber security companies. In fact, related companies such as Cloud Strike (+3.91 percent) and Palo Alto (+1.89%) are on the rise.

Semiconductors: Nvidia Is Definitely Strong in AMD Amid Restrictive Fluctuations
Nvidia (-0.32%) made omnibus and Isaac Seam available in Google Cloud Marketplace, helping to accelerate the transition of enterprise workloads, but ending the downward shift. Broadcom (-0.03%) also saw limited swings and falls amid limited particular factors. AMD (+3.21%) saw significant gains due to partnership issues with OpenAI. Notably, the BOA raised its target price to $300 from 250 last week, saying analyst day on Nov. 11 will be the main catalyst. Micron (+2.17%) rose, reflecting expectations of easing U.S.-China conflict. Intel (+2.95%) rises reflecting expectations ahead of earnings report.

Semiconductors: The Equipment Industry is clearly strong
KLA (+4.18%) is concerned about Barclays’ U.S.-China friction, but KLA’s sales in China compared to its peers