Stocks opened higher as more strong bank earnings provided an early boost. But volatility spiked again, and all three main U.S. equity indexes briefly dipped into the red before regaining their respective footing in the afternoon. Market participants remain wary of new tariffs and trade war talk from the White House.
The Cboe Volatility Index (VIX), widely recognized as the market's "fear index," jumped to 22.44 around 1 pm Eastern Standard Time on Wednesday from 20.81 on Tuesday. The VIX has risen from 16.43 on October 9. A "normal" range for the index is between 12 and 20.
The recent move correlates with the deployment of President Donald Trump's latest negotiating tactics in his ongoing, if indirect, conversation with President Xi Jinping of China about tariffs and other matters of global commerce.
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By Wednesday's closing bell, the blue chip Dow Jones Industrial Average was down 0.04% at 46,253 after rising as high as 46,693 then falling as low as 46,027. The broad-based S&P 500 edged up 0.4% to 6,671, and the tech-heavy Nasdaq Composite added 0.7% to 22,670.
More big banks, more big earnings
Morgan Stanley (MS, +4.7%) reported third-quarter earnings of $2.80 per share on revenue of $18.2 billion and handily beat a consensus forecast for earnings per share of $2.10 on revenue of $16.7 billion. The financial stock gapped up 4.9% after its early morning report.
Management cited strong stock market activity and stepped-up deal-making for the nearly 50% year-over-year EPS growth and the roughly 20% revenue growth.
Bank of America (BAC, +4.4%) posted similarly strong third-quarter numbers, EPS of $1.06 topped Wall Street's expectation for 95 cents, and its revenue rose 11% to $28.1 billion.
Management also raised its guidance for full-year net interest income.
No CPI (yet), no problem (yet)
The economic calendar promised the September Consumer Price Index (CPI) and a fresh look at inflation around this date, but the federal government shutdown means we won't get that data until October 24.
Those hurdles can't stop Wells Fargo economists Sarah House and Nicole Cervi: "We estimate headline CPI rose 0.4% last month, underpinned by a jump in energy prices, which would lift the year-over-year rate to a 16-month high of 3.1%." House and Cervi say core inflation "likely rose 0.3% for the third consecutive month, holding the year-over-year rate steady at 3.1%."
The economists aren't concerned about the impact of the shutdown on the underlying quality of the delayed September CPI because the Bureau of Labor Statistics (BLS) collected information through the end of the month as scheduled.
"But as the shutdown drags on with no end in sight," they write, "risks are mounting for October's report." The economists suggest, at minimum, collection rates will suffer. "And the risk is rising that the publication of the October CPI report could be skipped entirely," they observe.
"Setting aside the near-term data challenges," House and Cervi conclude, "sticky inflation persists." They expect inflation to hold near 3% through mid-2026.
NVTS stock goes nuts
Navitas Semiconductor (NVTS, +21.0%) settled up Wednesday afternoon – and gained as much as 22.7% in early trading – to follow gains of 21.1% on Monday and 26.1% on Tuesday. From its October 8 close, the semiconductor stock has soared 96%.
The surge was catalyzed by speculation and then a statement of progress in the company's development of advanced power devices to enable the 800 VDC power architecture for next-generation AI factory computing platforms Nvidia (NVDA, -0.1%) described in May.
According to Navitas, the emergence of the "AI factory" introduces a set of power challenges that traditional enterprise and cloud data centers are no longer able to meet.
"These challenges call for a fundamental architectural shift," Navitas said. The company makes semiconductors for power conversion and charging using both gallium nitride (GaN) and silicon carbide (SiC) technologies.
Its new devices directly power IT racks and don't require additional converters. Nvidia's new architecture improves efficiency and scalability and reduces copper usage.
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