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Stock Buyers Drive Biggest S&P 500 Rally Since May: Markets Wrap

(Bloomberg) — Wall Street traders lifted stocks as the US and China signaled willingness to keep trade negotiations alive, Middle East tensions cooled while the artificial-intelligence rally powered ahead.

Following its worst rout in six months, the S&P 500 jumped 1.6% to extend a bull market that’s already added $28 trillion to its value. The benchmark saw its best session since May. A key gauge of chipmakers surged nearly 5%. Broadcom Inc. soared about 10% as OpenAI agreed to buy its custom chips and networking equipment in a multiyear agreement.

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With trade jitters easing and investors brushing aside fears of a tech-fueled bubble, the market rebound showed that the buy-the-dip mentality remains firmly in place. That was ahead of the unofficial start of the earnings season, with a barrage of reports from big banks due Tuesday.

“Investors remain eager for exposure, and if this recovery holds, it will reinforce the idea that retail investors can’t be easily shaken and another reminder that buying the dip continues to work,” said Mark Hackett at Nationwide.

Risk appetite increased after President Donald Trump’s administration signaled openness to a deal with Beijing to quell fresh trade tensions while China’s Ministry of Commerce urged further negotiations to resolve outstanding issues.

Sentiment was also buoyed as Trump visited the Middle East to celebrate a deal halting the war in Gaza and securing the release of prisoners held by Hamas. Trump said food and aid has begun to flow into Gaza, which has been devastated by the conflict.

Treasury futures barely budged, with the US bond market closed for Columbus Day. The dollar rose 0.2%.

“You can argue all you want about valuations, or the economy, or confidence, or headline risk. But you absolutely cannot go all-in on betting against a charging bull,” said Callie Cox at Ritholtz Wealth Management.

The bull market in US stocks saw its third anniversary on Sunday, and the big question for many is: Where do equities go from here?

Bull markets that made it to year four have tended to perform very well during that year, according to Jeff Buchbinder and Adam Turnquist at LPL Financial.

For the seven bull markets since 1950 that lasted that long, the S&P 500 has, on average, gained 12.8% during the fourth year, they said. While this bull market has enjoyed a strong three years, history suggests it probably has more room to run, the LPL strategists noted.

“First, we need economic growth. Recessions kill bull markets, and thankfully, we don’t see one on the horizon. The Fed is in the middle of a rate-cutting cycle and inflation appears to be under control despite increased tariffs,” they said.

“More generally, we think that the bull market will remain intact, so pullbacks should offer an opportunity for investors who are underallocated to equities to consider adding long-term exposure,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.

Looking ahead to the rest of the year, equity performance will likely hinge on data related to employment, inflation, and earnings, particularly around AI spending and monetization themes, as well as technology profits and outlooks more broadly, according to Anthony Saglimbene at Ameriprise.

Near-term risks include earnings volatility, an escalation in trade tensions between the US and China, as well as some potential near-term investor disappointment if AI outlooks from key players in the space don’t match elevated expectations, he noted.

“Still, if fundamentals remain intact, we believe the market has an opportunity to settle slightly higher by year-end, despite temporary shifts in sentiment,” Saglimbene said.

Of the 13 prior bull markets since World War II, seven completed a fourth year, with an average total gain of 88%. This one has essentially done that in three years, putting the S&P 500’s trailing price-to-earnings ratio at 25 — the highest ever for a bull market in its third year, said Sam Stovall at CFRA.

Even as Stovall thinks the bull market has a good chance of celebrating its fourth birthday, history says it may be a volatile one, he noted.

“As the bull market enters its fourth year, we believe a balanced and cautiously optimistic view of the future remains appropriate, given current fundamental conditions and historical precedent,” said Saglimbene at Ameriprise.

The rally in US stocks is likely to pause if momentum in corporate profits fades in the third quarter, RBC Capital Markets strategists wrote in a note.

“If the strong sentiment around earnings that was seen in the last reporting season can’t be maintained, we think it will be difficult for the major indices to avoid a period of digestion in very near term,” the team led by Lori Calvasina said.

Equity analyst sentiment toward corporate profits is losing momentum at a time when US stocks are trading near record highs, suggesting the rally could face speed bumps this earnings season.

A Citigroup Inc. index tracking US earnings revisions — the number of analysts upgrading versus downgrading estimates — has turned flat for the first time since August. At the same time, the S&P 500 is trading near one of its highest valuations in 25 years — leaving a thin cushion for bad news.

A record-setting surge in US stocks has traders approaching the start of corporate earnings season with little patience for companies that don’t meet the bar. Investors will also be looking for reassurance on a range of potentially thorny issues, from the durability of AI spending to how elevated tariffs are impacting companies.

“This earnings season is important to gauge the overall health of the bull market. Investors will closely examine technology earnings as AI and data center capex is increasingly being called into question in terms of how this spending may or may not be leading to profits,” said Richard Saperstein at Treasury Partners.

Corporate Highlights:

Amazon.com Inc. plans to hire 250,000 workers during its peak season — unchanged from the previous two years — making the online retailer a standout in an otherwise bleak holiday labor market. Apple Inc. is bringing its superthin iPhone Air to China after a pause that allowed local carriers to prepare for the eSIM-only device. Exxon Mobil Corp. Chief Executive Officer Darren Woods renewed criticism of the European Union’s energy policies while praising US President Donald Trump’s approach. JPMorgan Chase & Co. vowed to funnel $1.5 trillion into industries that bolster US economic security and resiliency over the next 10 years — an initiative that will invest billions of dollars in companies and hire bankers and other professionals. Oracle Corp. will get a chance this week to reassure investors that a rally which has added roughly $370 billion to its market value this year is on stable footing. The software maker is hosting a four-day AI World conference starting Monday in Las Vegas, where much of the focus will be on Oracle’s cloud computing business. Beyond Meat Inc. tumbled after the troubled plant-based protein producer said nearly all creditors had accepted a debt swap that will lead to a substantial dilution of shareholders. Keurig Dr Pepper Inc. jumped after the Financial Times reported that Starboard Value had built a stake in the beverage company. Walt Disney Co. will air a six-part docuseries on the behind-the-scenes action of Taylor Swift’s Eras Tour, the highest-grossing concert tour of all time. First Brands Group’s Chief Executive Officer Patrick James has resigned from the company. James will be replaced by Charles Moore as interim CEO, according to a company statement. Jefferies Financial Group Inc. defended its dealings with First Brands Group and said its exposure to the bankrupt auto-parts supplier was small, as the investment bank sought to revive investor confidence after a sharp selloff in its stock. Douglas Lebda, the founder and chief executive officer of LendingTree Inc., died Sunday following an all-terrain vehicle accident. He was 55. Airbus SE is opening additional assembly lines in the US and China for its bestselling A320neo family as the company tries to reach production of 75 jets a month amid a massive backlog. Virgin Atlantic Airways Chief Executive Officer Shai Weiss will step down after a seven-year tenure marked by returning the UK airline to an annual profit. Brookfield will acquire the remaining parts of distressed-debt specialist Oaktree Capital Management it doesn’t already own, adding further heft to its credit business that’s emerged as a key driver of growth in recent years. Tata Capital Ltd. advanced in its Mumbai trading debut after the shadow lender wrapped up its 155-billion-rupee ($1.7 billion) initial public offering, India’s biggest this year. What Bloomberg Strategists say…

“In the absence of official data, what banks can say about credit card losses, loan losses, credit quality and the pulse of the consumer will go a long way toward filling the data void.”

– Edward Harrison, Macro Strategist, Markets Live. For the full analysis, click here.

Some of the main moves in markets:

Stocks

The S&P 500 rose 1.6% as of 4 p.m. New York time The Nasdaq 100 rose 2.2% The Dow Jones Industrial Average rose 1.3% The MSCI World Index rose 1.1% Bloomberg Magnificent 7 Total Return Index rose 2.4% Philadelphia Stock Exchange Semiconductor Index rose 4.9% The Russell 2000 Index rose 2.8% Broadcom rose 9.9% Currencies

The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.5% to $1.1566 The British pound fell 0.2% to $1.3331 The Japanese yen fell 0.8% to 152.33 per dollar Cryptocurrencies

Bitcoin rose 0.7% to $115,884.9 Ether rose 2.8% to $4,256.42 Bonds

Germany’s 10-year yield was little changed at 2.64% Britain’s 10-year yield declined two basis points to 4.66% Commodities

West Texas Intermediate crude rose 1.3% to $59.69 a barrel Spot gold rose 2.3% to $4,109.51 an ounce ©2025 Bloomberg L.P.

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