World stocks fall back despite latest earnings-driven rally on Wall
Street
[October 07, 2026] By
ELAINE KURTENBACH
World shares retreated Wednesday after U.S. stocks hit all-time highs,
lifted by expectations of fat corporate earnings.
In early European trading, the CAC 40 in Paris lost 0.4% to 7,836.77,
while Britain's FTSE 100 shed 0.1% to 10,532.87. In Germany, the DAX
lost 0.4% to 25,338.97.
In Tokyo, the Nikkei 225 lost 0.9% to 70,035.71, while the Kospi in
South Korea dropped 2% to 6,803.90.
Hong Kong's Hang Seng fell 0.6% to 24,130.50 and Taiwan's Taiex was
nearly unchanged.
Markets in Shanghai were closed for a national holiday.
In Australia, the S&P/ASX 200 erased early gains to edge 0.1% lower,
closing at 8,727.70.
On Tuesday, U.S. stocks climbed to new heights despite an array of
challenges.
The S&P 500 climbed 0.6% to a record of 7,818.93, topping its all-time
high set in August. Despite worries over the Iran war, high inflation
and pressures from the bond market, the index at the heart of many
401(k) accounts has soared 23% since hitting a trough in late March.
The Dow Jones Industrial Average added 0.5% to 51,521.28, while the
Nasdaq composite tacked 0.4% onto its own all-time high set the day
before, closing at 27,599.79.
“The rally reflected confidence that corporate earnings, particularly
across technology and AI-related sectors, can withstand elevated energy
costs and restrictive interest rates,” Ng Jing Wen of Mizuho Bank said
in a commentary.
“The resilience suggests investors continue to prioritize earnings
momentum over near-term inflation risks,” she said.
Record-high stock prices are helping investors feel better about their
finances, or at least less bad, while Americans are generally feeling
discouraged about keeping up with the fast-rising cost of living.
Many of the fears that sent the U.S. stock market to its bottom in March
have indeed come true. Oil prices are high because of the war with Iran,
which has made inflation worse. Yields have cranked higher in the bond
market, which threatens to slow the economy by making it more expensive
for everyone to borrow money. And Americans broadly say they’re feeling
more pessimistic about the economy and where it’s heading.
But one vital source of support has persisted: strong corporate
earnings.
Lamb Weston, which sells frozen fries and other potato products, said on
Tuesday that its profit and revenue during its latest quarter topped its
projections, for example. The results also beat analysts’ expectations,
and its stock rallied 7.5%.
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A currency trader passes by screens showing the Korea Composite
Stock Price Index (KOSPI) and the foreign exchange rate between U.S.
dollar and South Korean won at the foreign exchange dealing room of
the Hana Bank headquarters in Seoul, South Korea, Tuesday, Oct. 6,
2026. (AP Photo/Ahn Young-joon)
 Constellation Energy helped lead the
way after announcing a long-term deal to provide Google with
electricity.
All kinds of companies are expected to report robust profits for the
July through September quarter. Delta Air Lines will report its
third-quarter results on Friday, with several of the country’s
biggest banks headlining next week.
Analysts expect companies in the S&P 500 to deliver overall growth
of nearly 30% in earnings per share from a year earlier, according
to data provider FactSet. If they’re correct, it would be the third
straight quarter of growth better than 25%.
If companies fail to deliver such performances, stock prices could
easily fall back from their records. Some critics also point to a
possible bubble in stocks in the artificial-intelligence industry
given how much they have soared in the frenzy around the technology.
AI stocks have been a huge force driving the U.S. market to records,
including Nvidia’s 28.3% surge so far this year. That's roughly
double the broad market’s gain.
Bond yields offered some slack on Tuesday after falling back from
their highest levels in years or even decades.
The yield on the 10-year Treasury, which is the focal point of the
U.S. bond market, eased to 5.28% from 5.31% late Monday. It fell
after oil prices steadied somewhat.
But crude prices rebounded early Wednesday. The price for a barrel
of Brent crude oil, the international standard, was up 0.7% at
$101.26. That's still below the nearly $110 it was at a few weeks
ago.
U.S. benchmark crude rose 0.3% to $89.66 per barrel.
Also early Wednesday, the U.S. dollar fell to 158.13 Japanese yen
from 158.10 yen. The euro slipped to $1.1197 from $1.1260.
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