Dow Jones Rises 300 Points, Hits New Record High

The Dow Jones Industrial Average in the United States closed at a record high on Wednesday, rebounding from the sell-off in the previous trading session.

The blue-chip index rose by 337.28 points, closing at 43,077.70, up 0.79%. The S&P 500 increased by 0.47% to 5,842.47, and the Nasdaq Composite Index rose by 0.28%, closing at 18,367.08.

Morgan Stanley's stock price jumped by 6.5% following the company's third-quarter earnings and revenue that exceeded Wall Street expectations. United Airlines also reported better-than-expected results and projected strong performance in the fourth quarter, propelling the company's stock price up by 12.4%.

The reporting period has started on a positive note. According to FactSet data, approximately 50 S&P 500 constituents have reported third-quarter earnings so far, with 79% of them beating expectations.

On Tuesday, both the Dow Jones and the S&P 500 retreated from their recent record highs, with declines exceeding 0.7%. The Nasdaq Composite Index fell by 1%.

Despite increased market volatility, Sam Stovall, Chief Investment Strategist at CFRA Research, still believes that the stock market may rise in the short term, especially considering the rebound to new highs in September.

"Typically, September in an election year is negative. However, if they are positive, it also implies that October will be positive, rather than the more usual negative October," he told CNBC, "In the last two months of an election year, the market has almost always been rising, with positive returns across all sizes, styles, and sectors. Therefore, investors are very aware of the dynamics behind the market."

Nevertheless, Stovall did not rule out the possibility of a stock market correction, as the market appears very stretched at its current valuation level. However, the investor indicated that any selling is highly likely to occur after the election, possibly not until next year.

He added, "We may ultimately be affected by some external events that could cause stock price fluctuations."*Continued Investment is Still on the Agenda*

The stock market may be at an all-time high, but UBS states that it is not time to cash out.

The company wrote in a report to its clients: "Our analysis of the past 60 years shows that the S&P 500's returns over the next 3, 6, and 12 months after reaching new historical highs are essentially the same as during all other periods. At the same time, we expect the macroeconomic and earnings environment to remain favorable, which supports continued investment in stocks."

However, the bank believes that economic growth will slow down from now on, so it advises investors to be selective and focus on "high-quality companies with strong balance sheets and stable earnings." UBS says that many companies that meet this criterion are in the technology sector.

*Analysts Finally Begin to Lower Earnings Growth Forecasts for 2025*

According to Strategas, as the third-quarter earnings season is in full swing, analysts are finally beginning to lower their expectations.

"So far, the traditional earnings per share (EPS) decay that the S&P usually experiences for 2025 has largely been avoided. However, analysts are finally starting to revise the numbers down, as well as for 2024. The current numbers still reflect a nearly 15% growth rate for the year 2025, and if these earnings figures are realized, profit margins are expected to reach an all-time high."Grabinski anticipates that technology stocks will be the largest contributors to earnings growth in the third quarter, while energy stocks will be the biggest drags.

*Pullbacks can be seen as good buying opportunities*

According to Piper Sandler, Tuesday's sell-off is just a blip on the radar.

The investment firm said in a report on Wednesday that the weakness of the previous trading day will ultimately not affect the market's upward trend.

Piper Sandler wrote: "The weakness on Tuesday will not change the medium to long-term upward trend, and we believe it will be proven to be just a pullback in the context of the long-term upward trend."

"October is often a 'covering' month, but it usually has a bullish tone. We believe that pullbacks in the current upward trend are buying opportunities, especially in leading mid-cap stocks in the industrial, financial, and technology sectors."