The Daily: markets hit highs as US banks issue strong reports and investors buy the chip dip

Australia’s market hit a brand new record all time high on Thursday. It followed US stocks roaring back, with small caps index, the Russell 2000 $Russel 2000 ETF (LIST2714.US)$ up the most, 1.6%, hitting its highest level since Nov 2021. While the US blue chip index, the Dow Jones $SPDR Dow Jones Industrial Average Trust (DIA.US)$ hit a new record high on Wednesday.

So what’s happening? Investors bought into the weakness from the prior day, buying the chip dip, with Nvidia $NVIDIA (NVDA.US)$ gaining 3.1%. While investors are also buying into everything and anything in the S&P500 that has had strong momentum and is up the most this year. That’s typical in a bull market. With energy and uranium company Vistra $Vistra Energy (VST.US)$ rose about 6% taking its yearly gain to 257% outpacing Nvidia. While smalls caps rallied on potential tax cuts after billionaire investor Druckenmiller said markets are pricing in a Trump win. I think he probably looked at the polls and betting companies which are pricing a Trump win,

Firstly – Australia’s second biggest company BHP $BHP Group Ltd (BHP.US)$ reported quarter results with output rising  -  and copper output up the most. Meanwhile BHP said it sees signs of steel making stabilising which is one of the reasons its key ingredient, iron ore has moved up 1% in price today.  

Secondly - let’s talk US earnings. It’s been better than expected so far. That’s another factor supporting markets. Overnight Morgan Stanley $Morgan Stanley (MS.US)$ shares soared almost 7%, its biggest jump in four years, with profits rising more than expected. Get this, its wealth unit rose by US$64 billion in net new assets. That’s more than the value the ANZ $ANZ Group Holdings Ltd (ANZ.AU)$ bank on ASX.

Let’s finish the big picture. the US election weeks away, volatility could pick up. But if you notice the patterns of this bull market, it seems all pull backs in the S&P500 have been bought. So maybe look for pull backs as opportunity to buy. Keep an eye on Thursday’s US retail sales and US jobless claims are on watch. And Netfilx earnings.