S&P 500 Soars as Strong Bank Earnings Offset Trade War Fears

The Vanguard S&P 500 ETF (VOO) showed strong momentum as banking giants delivered exceptional quarterly results that exceeded analyst expectations. Bank of America (BAC) reported earnings per share of $1.06, significantly beating the anticipated 95 cents, while revenue reached $28.24 billion compared to expectations of $27.5 billion. This performance follows similar strong showings from JPMorgan Chase, Wells Fargo, and Goldman Sachs in recent days, creating a positive momentum for the financial sector.

Morgan Stanley (MS) contributed to the banking sector’s impressive run with its own outstanding results. The investment bank posted EPS of $2.80, far surpassing estimates of $2.10, while revenue of $18.22 billion dramatically exceeded the $16.7 billion forecast. These better-than-expected earnings from multiple financial institutions provided the market with fundamental strength that helped offset broader economic concerns, particularly around escalating trade tensions between the United States and China.

While earnings provided positive momentum, trade war concerns intensified as President Trump warned of implementing 100% tariffs on Chinese exports by November 1. The threat came in response to Beijing’s warning of strict export controls on rare earth metals, escalating the economic conflict between the world’s two largest economies. The President specifically cited China’s reduced purchases of U.S. soybeans as ‘an Economically Hostile Act’ in a Truth Social post noted by CNBC.

President Trump further escalated tensions by threatening a cooking oil embargo against China, stating ‘We are considering terminating business with China having to do with Cooking Oil, and other elements of Trade, as retribution.’ He added that the United States could ‘easily produce Cooking Oil ourselves’ without needing to purchase it from China. Despite these concerning developments, the market appeared to focus more on the positive earnings narrative than the trade war escalation.

The trade war developments created winners in specific sectors, with agricultural stocks Bunge Global (BG) rising approximately 5% in premarket trading and Archer-Daniels-Midland (ADM) gaining about 2.8%. These moves reflected investor expectations that reduced Chinese competition and potential domestic production increases could benefit American agricultural companies in the cooking oil supply chain.

Beyond the banking sector, Guggenheim analysts provided additional positive sentiment by upgrading Uber (UBER) to a buy rating with a $140 price target. The firm cited Uber’s ‘asset base consisting of industry-leading 1) network, 2) technology, and 3) brand equity’ as key drivers of their bullish thesis. Guggenheim specifically noted that ‘Uber’s multi-platform network is >3x that of next ‘Gig’ peer, with reach positioning the Rideshare leader for increased Autonomous Vehicle (AV) adoption.’

With Uber last trading at $94.25 as of Tuesday’s close, analysts are watching for the ride-sharing stock to retest its recent high of $100.18 per share. The upgrade reflects growing confidence in Uber’s market position and technological advantages as the company continues to expand its service offerings beyond traditional ride-sharing.

Looking ahead, investors are preparing for another wave of earnings reports that could further influence market direction. On Thursday, October 16, companies including J.B. Hunt Transport Services (JBHT), KeyCorp (KEY), M&T Bank (MTB), Travelers Companies (TRV), and CSX Corp (CSX) are scheduled to report. Friday, October 17 will bring results from Fifth Third Bancorp (FITB), Interactive Brokers (IBKR), State Street Corp (STT), Truist Financial (TFC), and American Express Company (AXP), providing additional insight into the health of the financial and transportation sectors.