Stocks Climb as Trade Hopes Dim Bond, Gold Appeal: Markets Wrap
(Bloomberg) — Wall Street’s hopes the US and China are nearing a trade deal lifted the riskier corners of the market, with stocks hitting all-time highs amid a rally in the crypto world. Bonds fell. Gold sank below $4,000 an ounce.
The S&P 500 rose about 1% as Chinese and US trade negotiators have lined up an array of diplomatic wins for Donald Trump and Xi Jinping to unveil at a summit this week. With further Federal Reserve interest-rate cuts on the way, the profit outlook is looking increasingly brighter.
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“The market continues to push higher on the back of strong earnings and easing US-China trade tensions,” said Mark Hackett at Nationwide. “Moving forward, a cascade of tailwinds will support markets, including strong seasonality, resolution of trade disputes, fiscal stimulus, and easing monetary policy.”
Corporate America appears fairly unscathed by tariffs so far, with firms protecting their margins through price hikes and cost cuts. As earnings roll in, companies in the US equity benchmark are on course to deliver the highest sales beat ratio since 2021.
The view among strategists is that the strongest revenue growth remains concentrated in tech. On Wednesday and Thursday, five firms that account for about a quarter of the S&P 500 — Microsoft Corp., Alphabet Inc., Meta Platforms Inc., Amazon.com Inc. and Apple Inc. — will report results.
“With the Fed on track to cut rates, extending the run would appear to hinge on this week’s lineup of high-profile earnings releases,” said Chris Larkin at E*Trade from Morgan Stanley. “And it may, barring any surprises in US-China trade negotiations.”
The S&P 500 topped 6,850. A gauge of the “Magnificent Seven” megacaps jumped 2.5%. Ten-year yields rose one basis point to 4.01%.
Mexico’s peso gained as President Claudia Sheinbaum said US is extending a deadline to reach a trade deal. Argentina’s markets rallied as President Javier Milei’s party pulled off a victory in legislative elections.
Trump told reporters on Monday that “I really feel good” about a deal with China, after officials unveiled a slew of agreements to ease tensions. While markets cheered the latest developments, some analysts cautioned the deal now teed up for Trump and Xi to sign in South Korea ignored thorny issues.
Fundamental fights over national security appeared untouched, they said, along with Trump’s stated core mission of rebalancing trade. Making that harder, Chinese investment into America remains heavily restricted.
“While these developments have lifted market spirits, analysts remain skeptical that the underlying issues will be fully resolved,” said Fawad Razaqzada at City Index and Forex.com. “Nevertheless, traders have embraced the risk-on mood.”
Aside from the trade picture, this earnings season is standing out as analysts had set the bar higher by raising projections heading into it. Robust earnings and signs of sustained investment in artificial intelligence are countering threats to stocks from trade headlines and the government shutdown.
“With companies having reported strong third-quarter results so far amid a favorable backdrop, we expect US stocks to rally further in the coming months,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management. “So, we maintain our attractive view on US equities, forecasting the S&P 500 to reach 7,300 by June 2026.”
Microsoft, Alphabet, Amazon and Meta are projected to post a combined $360 billion in capital expenditures in their current fiscal years, much of it related to AI. That spending is expected to jump to nearly $420 billion next year, according to analyst estimates compiled by Bloomberg.
“We expect another strong round of megacap tech earnings reports, given the relentless demand for AI technology and infrastructure,” said Clark Bellin at Bellwether Wealth. “While profitability in AI remains an unknown, investors right now are willing to overlook this as the AI arms race heats up.”
To Matt Maley at Miller Tabak, the most-important issue will be the comments about the future rate of spending on AI from the hyperscalers.
“Expectations are very high on this front, so there are some risks involved,” he said. “However, since there hasn’t been any signals that these companies will back off on their spending, these high expectations seem to be well placed.”
“Our view remains firmly risk-on into 2026, with our base case for a further melt-up in risk assets in the coming months,” said Max Kettner at HSBC.
Among the various catalysts, he cited: further signs of US growth resilience, subdued sentiment and positioning as well as liquidity tailwinds with an end to quantitative tightening and perhaps even more Fed liquidity support to avert a year-end funding squeeze.
Equity analysts are expected to broaden their earnings revisions to more stocks toward the end of the year and into 2026, according to Morgan Stanley strategists.
“We have high conviction in our rolling recovery thesis, which remains out of consensus,” the team led by Michael Wilson wrote.
The third-quarter earnings season has proved stronger than expected and could deliver results beyond what analysts expected prior to “Liberation Day” in April, according to Deutsche Bank AG strategists led by Binky Chadha.
After two weeks of heavy selling, hedge funds turned net buyers of US equities last week as softer inflation data fueled bets on imminent Fed rate cuts, pushing major indexes to new highs.
The buying was largely driven by short covering rather than fresh long positions, according to Goldman Sachs Prime brokerage desk’s report for the week ending Oct. 24.
Corporate Highlights:
Qualcomm Inc. kicked off its biggest stock rally since 2019 after unveiling chips and computers for the lucrative AI data center market, aiming to challenge Nvidia Corp. in the fastest-growing part of the industry. Nvidia Corp. has spent the past three years ensnared in an escalating trade impasse between the US and China that has kept its prized artificial intelligence chips out of a crucial market and cost it billions of dollars in revenue. Now, the same week President Donald Trump plans to meet China’s Xi Jinping to finalize a trade deal between the world’s top two economies, Nvidia will hold one of its biggest AI conferences at a massive convention hall just blocks from the White House. Wall Street analysts are now almost universally bullish on Microsoft Corp., with Guggenheim upgrading the software company to buy from hold ahead of its quarterly results. Berkshire Hathaway Inc. got a rare sell rating, with analysts cautious on its earnings outlook and ongoing concerns over Warren Buffett’s upcoming departure and macro risks. International Business Machines Corp. is launching a digital assets platform to allow financial institutions, governments and companies to launch blockchain-based services, as crypto activity gathers steam. Huntington Bancshares Inc. agreed to buy Cadence Bank for $7.4 billion, the Ohio bank’s second major acquisition this year to expand in southern and southeastern states and the latest in a string of deals among US regional lenders. American Water Works Co. agreed to buy Essential Utilities Inc. in an all-stock deal valued at about $12 billion. Keurig Dr Pepper Inc. is raising $7 billion from Apollo and KKR to help finance its acquisition of JDE Peet’s NV, aiming to ease investor concerns about taking on too much debt. The beverage maker also expects fiscal 2025 constant currency net sales growth to be in high-single-digit range, up from a previous prediction in the mid-single-digits. Lululemon Athletica Inc. has entered an arrangement with the National Football League and sports merchandiser Fanatics Inc. to develop a line of fan apparel as the yoga-wear retailer searches for new avenues of growth. Cigna Group will eliminate prescription drug rebates in many of its commercial health plans in 2027, upending an opaque, controversial practice that’s drawn the ire of President Donald Trump. Easterly Government Properties Inc.’s quarterly revenue surged the most in five years, driven by the Trump administration’s focus on law enforcement-spending. The chief executive of Organon, the company behind the birth control implant product Nexplanon, has stepped down after an audit committee uncovered improper sales practices related to the medicine. Novartis AG agreed to buy Avidity Biosciences Inc. in a $12 billion deal that’s the Swiss drugmaker’s biggest acquisition in more than a decade and adds several potential blockbuster treatments as generic competition looms for its current top-sellers. Porsche AG vowed to reverse months of poor performance with a new chief executive officer and changed course on its EV strategy. Some of the main moves in markets:
Stocks
The S&P 500 rose 1% as of 11:58 a.m. New York time The Nasdaq 100 rose 1.6% The Dow Jones Industrial Average rose 0.5% The Stoxx Europe 600 was little changed The MSCI World Index rose 0.8% Bloomberg Magnificent 7 Total Return Index rose 2.4% The Russell 2000 Index rose 0.3% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1635 The British pound rose 0.1% to $1.3327 The Japanese yen fell 0.2% to 153.10 per dollar The Mexican peso rose 0.3% to 18.3969 Cryptocurrencies
Bitcoin rose 1.5% to $114,988.76 Ether rose 2.8% to $4,174.77 Bonds
The yield on 10-year Treasuries advanced one basis point to 4.01% Germany’s 10-year yield was little changed at 2.62% Britain’s 10-year yield declined two basis points to 4.41% The yield on 2-year Treasuries advanced three basis points to 3.51% The yield on 30-year Treasuries declined one basis point to 4.58% Commodities
West Texas Intermediate crude rose 0.4% to $61.72 a barrel Spot gold fell 3% to $3,989.46 an ounce ©2025 Bloomberg L.P.
