On a bustling Tuesday morning in New York, the New York Stock Exchange was a hive of activity. The S&P 500 and the Dow Jones Industrial Average reached unprecedented heights on Friday, marking a successful week as the banking giants kicked off the third-quarter earnings season on a high note. The S&P 500 index climbed by 0.6%, concluding at 5,815.03, while the Dow Jones surged by 409.74 points, or nearly 1%, settling at 42,863.86. The Nasdaq Composite also saw gains, increasing by 0.3% to close at 18,342.94, just shy of 2% from its record peak. Craig Sterling, the head of U.S. equity research at Amundi US, commented on the market's expansion, noting its significant positive impact on the current day's trading.

The major market indices also achieved a streak of five consecutive weeks of gains. Both the S&P and Nasdaq recorded a 1.1% increase each, whereas the Dow Jones posted a 1.2% gain. The robust commencement of the third-quarter earnings season provided a significant boost to the stock market. JPMorgan Chase's stock price increased by 4.4% after the company reported profits and revenues that exceeded expectations. Similarly, Wells Fargo's shares jumped by 5.6% following the announcement of stronger-than-anticipated profits. Despite disappointing revenue figures and an 11% drop in net interest income, investors remained optimistic. Kim Forrest, the chief investment officer at Bokeh Capital Partners, pointed out the shift in investors' focus from net interest income as the primary indicator of a bank's performance, acknowledging that banks are now seen as capable of generating profits in both favorable and challenging economic conditions.

Historically, Wall Street has used the banking sector as an indicator of the overall health of the economy, which often sets the tone for the rest of the earnings season. However, Forrest highlighted the lack of visibility into forward guidance, which frequently influences stock movements following earnings reports. Stocks also received a boost from economic data that eased concerns about inflation not decelerating quickly enough. This included a lower-than-anticipated September producer price index, following a slightly higher-than-expected increase in the consumer price index. These findings suggested that the Federal Reserve might indeed achieve a soft landing and reach its 2% inflation target, a possibility that Goldman Sachs economists believe could be reflected in the upcoming September inflation data. David Russell, the global head of market strategy at TradeStation, stated that as inflation moderates, these numbers are becoming less impactful, and the Fed might still be on track to raise interest rates by 25 basis points at the next two meetings.

Fed funds futures trading indicated a roughly 86% probability that the Federal Reserve would reduce interest rates by a quarter point in November, according to the CME FedWatch Tool. Central bank policymakers will continue to monitor additional data closely, which will influence their decisions on interest rates. In other market news, Tesla's shares plummeted by 8.8% following a disappointing robotaxi event, which failed to impress investors.