Stocks Climb on Trade Hopes and Broadcom’s AI Deal: Markets Wrap
(Bloomberg) — Stock buyers powered a rebound on Wall Street as both the US and China signaled willingness to keep trade negotiations alive. OpenAI’s deal Broadcom Inc. added fuel to the artificial-intelligence rally.
Following its worst selloff since April, the S&P 500 climbed over 1%. Tech companies led gains on Monday, driving the Nasdaq 100 up about 2%. Broadcom surged 9%. Treasury futures edged mildly lower, with the US bond market closed for Columbus Day. The dollar rose.
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President Donald Trump’s administration signaled openness to a deal with China to quell fresh trade tensions while also warning that Beijing export controls are a major barrier to talks. China’s Ministry of Commerce urged further negotiations to resolve outstanding trade issues.
“The mood music has been notably more positive, and it’s still very possible, maybe even likely, that both sides are simply trying to strengthen their near-term negotiating positions,” said Jim Reid at Deutsche Bank AG.
Sentiment was also buoyed by cooling of Middle East tensions as President Trump visited the region to celebrate a deal halting the war in Gaza and securing the release of prisoners held by Hamas.
Traders are gearing up for the unofficial start of the US earnings season. The barrage of reports from big banks begins Tuesday, with JPMorgan Chase & Co., Goldman Sachs Group Inc., Citigroup Inc. and Wells Fargo & Co.’s results. Next up are Bank of America Corp. and Morgan Stanley on Wednesday.
Wall Street’s biggest banks are poised for another strong quarter, buoyed by resilient trading desks and a rebound in deal activity. Bank stocks have surged in recent weeks on optimism that a milder regulatory environment under the Trump administration would jump-start corporate dealmaking and boost advisory revenue.
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.
Meantime, 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 around 22 times forward earnings, above the average over the past decade of nearly 19 times.
Investors should buy cheap stocks with the highest track record of beating both revenue and earnings expectations ahead of the third-quarter reporting season, according to a team of strategists led by Evercore ISI’s Julian Emanuel.
With the S&P 500 already at high valuation multiples and investors bracing for tariff negotiations between US and China, earnings reactions will likely be varied and violent for stocks, the strategists said.
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.
The bull market in US stocks saw its third anniversary on Sunday, but if history is any guide it needs to broaden out soon to keep running.
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 Wall Street veteran and CFRA chief investment strategist Sam Stovall.
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.
Corporate Highlights:
OpenAI signed a multiyear agreement with Broadcom Inc. to collaborate on custom chips and networking equipment, marking the latest step in the AI startup’s ambitious plan to add computing infrastructure. 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. 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. 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. Wayve Technologies Inc., a British artificial intelligence startup focused on self-driving car technology, is in talks to raise as much as $2 billion from Microsoft Corp. and SoftBank Group Corp., the Financial Times reported. 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. 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. Some of the main moves in markets:
Stocks
The S&P 500 rose 1.2% as of 10:29 a.m. New York time The Nasdaq 100 rose 1.7% The Dow Jones Industrial Average rose 0.9% The Stoxx Europe 600 rose 0.2% The MSCI World Index rose 0.8% Bloomberg Magnificent 7 Total Return Index rose 1.6% The Russell 2000 Index rose 1.8% Broadcom rose 8.9% Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.5% to $1.1562 The British pound fell 0.3% to $1.3321 The Japanese yen fell 0.8% to 152.39 per dollar Cryptocurrencies
Bitcoin fell 0.6% to $114,361.75 Ether fell 0.8% to $4,109 Bonds
Germany’s 10-year yield declined one basis point to 2.63% Britain’s 10-year yield was little changed at 4.67% Commodities
West Texas Intermediate crude rose 1.8% to $59.97 a barrel Spot gold rose 1.9% to $4,095.28 an ounce ©2025 Bloomberg L.P.
