Pre-market Market Movements 1. On October 21 (Tuesday), U.S. stock index futures showed mixed results. As of publication, Dow futures were up 0.08%, S&P 500 futures were up 0.03%, and Nasdaq futures were down 0.05%. 2. Meanwhile, as of publication, Germany's DAX index rose 0.17%, the UK's FTSE 100 index was up 0.30%, France's CAC 40 index increased by 0.55%, and the Euro Stoxx 50 index rose by 0.26%. 3. In commodities, WTI crude oil was up 0.79% at $57.47 per barrel, while Brent crude oil rose 0.67% to $61.42 per barrel.

Market Insights The rebound in the U.S. stock market does not reflect genuine confidence! Short covering has led to a "false prosperity," and the upward trend may be hard to sustain. When the U.S. stock market rebounds from a sell-off amid ongoing uncertainties, it is often propelled by a single aggressive buyer — forced short covering. While such aggressive covering can lift the overall market, this dynamic may create a false sense of "confidence voting." In reality, market participants remain uncertain about U.S. President Trump's trade agenda or the Federal Reserve's policy direction. Despite a 1.7% rise in the S&P 500 last week, risk aversion has increased, with traders selling call options to raise funds for downside protection.

Bank of America warns: If a credit storm escalates, pension funds may be forced to liquidate index funds, potentially becoming the next flashpoint for U.S. stocks. Strategists at Bank of America indicated that further tightening in the credit market could trigger another significant drop in U.S. stocks, as pension funds and other long positions may be compelled to sell assets. Savita Subramanian, head of U.S. equities and quantitative strategy at Bank of America Securities, pointed out that if private lending continues to dwindle, institutions like pension funds might have no choice but to unload index funds to avoid punitive losses stemming from declines in private asset valuations while meeting ongoing funding obligations. She emphasized that passive investing has "dominated the S&P 500 benchmark," meaning that an economic downturn could force funds tied to this index to collectively sell stocks.

Allianz Economists: The AI investment boom is a "rational bubble" that will help the U.S. outpace the global market. Mohamed El-Erian, chief economic advisor at Allianz Group, noted that the U.S. economy is undergoing a boom driven by artificial intelligence, allowing it to outperform global markets. El-Erian stated that the current investment frenzy in AI represents a "rational bubble," promising significant productivity gains for the economy. He also commented on the simultaneous rise in gold prices, attributing this trend to international concerns over the U.S. dollar rather than domestic economic weaknesses.

Frequent signals of "tight money" lead Wall Street to firmly believe the Federal Reserve will signal the end of balance sheet reduction this month. Several Wall Street analysts predict that the Federal Reserve may announce at the end of this month’s meeting the cessation of a years-long asset balance sheet reduction program. Observers note that increasing friction in the money market could hinder achieving dual objectives of inflation and employment, leading to a significant turning point for quantitative tightening (QT) policy. Analysts believe that if QT is halted to stop liquidity absorption during the Federal Open Market Committee (FOMC) meeting on October 28-29, it would help ensure smooth monetary policy operations on a technical level. This shift in policy expectation stemmed from recent market fluctuations: several financial institutions unexpectedly utilized the Federal Reserve's standing repo facility (which provides quick cash loans to financial institutions against their held bonds), causing several key short-term borrowing rates to rise.

Optimism in trade fails to outweigh RSI pressure? Gold price oscillates at new highs. Despite rising optimism over the easing of global trade tensions and the impending restart of U.S. government activities, gold prices remained shaky at historically high levels, indicating persistent strong safe-haven demand. However, technical indicators like the Relative Strength Index (RSI) suggest that the vigorous surge since August may have reached an overbought condition, making it difficult to sustain such frenzied momentum. As of publication, spot gold was down over 2% at $4,265.32 per ounce, while spot silver fell over 4% to $50.09 per ounce.

Individual Stock Updates General Motors (GM.US) exceeded Q3 earnings expectations and raised its annual profit guidance. The earnings report indicated that General Motors' Q3 revenue was $48.59 billion, surpassing the market expectation of $45.26 billion. The adjusted earnings per share were $2.80, exceeding the market estimate of $2.27. The company forecasted a full-year adjusted EPS of $9.75–$10.50 for 2025, an increase from the previous expectation of $8.25–$10.00; it expects full-year adjusted EBIT of $12–$13 billion, previously anticipated at $10–$12.5 billion. General Motors' optimistic outlook reflects a surge in sales of high-margin fuel SUVs and trucks, a trend partially benefitting from adjustments in federal emissions policies. The company mentioned that lower tariffs would offset about 35% of tariffs' impacts by 2025. With increased investments in domestic procurement and manufacturing scale, the company is in a very favorable position. As of publication, General Motors saw a nearly 10% pre-market surge on Tuesday.

Coca-Cola (KO.US) Q3 performance exceeded expectations, reaffirming its 2025 guidance. The earnings report revealed that Coca-Cola's Q3 revenue was $12.46 billion, slightly above the market expectation of $12.41 billion; its adjusted EPS was $0.82, higher than the forecast of $0.78. CEO James Quincey stated, “We are confident in our ability to achieve our 2025 guidance while striving for our long-term goals.” The company maintained that it remains on track to achieve a 5% to 6% organic revenue growth for 2025, along with a 3% increase in adjusted earnings to $2.88 per share compared to 2024. As of publication, Coca-Cola stock climbed nearly 3% in pre-market trading on Tuesday.

Strong performance in the commercial engine segment boosts GE Aerospace (GE.US) Q3 revenue by 24%, raising full-year EPS expectations. The report indicated that GE Aerospace's Q3 revenue grew by 24% year-on-year to $12.18 billion, surpassing the market expectation of $10.41 billion; its adjusted EPS was $1.66, exceeding the prediction of $1.47. Revenue from the commercial engine sector increased by 26.8% year-on-year to $8.88 billion, surpassing the market estimate of $8.34 billion. The company projected an EPS expectation of $6.00–$6.20 for 2025, revised upwards from the previous range of $5.60–$5.80.

Zions Bank (ZION.US) exceeded Q3 profit expectations, with analysts noting that credit pressures among U.S. regional banks remain isolated. Despite suffering significant losses from two loans, Zions Bank reported increased Q3 profits thanks to rising interest income. The earnings report showed that Zions Bank’s Q3 revenue was $872 million, an 8.5% year-on-year rise, exceeding market expectations; the EPS was $1.48, above the forecast of $1.39. Analyst Terry McEvoy from Stephens indicated that "many U.S. regional banks' Q3 reports did not reveal unusual or unexpected credit losses, and management's outlook for Q4 is reassuring. These trends support the view that the pressures faced by a few companies are more isolated incidents rather than emerging trends."

DocGo (DCGO.US) stock surges pre-market after acquiring virtual healthcare platform SteadyMD. DocGo announced the acquisition of the virtual healthcare platform SteadyMD. The company plans to update its revenue and adjusted EBITDA guidance for 2025 to incorporate the impact of this acquisition during the earnings report and conference call set for early November. As of publication, DocGo's pre-market stock surged nearly 27%.

Earnings Forecast for Wednesday Morning: Netflix (NFLX.US), Texas Instruments (TXN.US), and Alliance Bank West (WAL.US). Pre-market on Wednesday: Barclays (BCS.US), Teck Resources (TECK.US), and AT&T (T.US).