Stocks Gain as Trade Tensions Stir More Volatility: Markets Wrap
(Bloomberg) — Wall Street was lashed with volatility as investors struggled to gauge the scope of trade tensions between the world’s two largest economies. Stocks rallied, plunged, then rose anew amid optimism over earnings.
Following one of the best six-month stretches for equities since the 1950s, the market has seen brief bouts of profit-taking in a move dubbed a “healthy reset” after a torrid surge. Those downward shifts haven’t lasted long on speculation that Federal Reserve interest-rate cuts will keep the positive momentum going for Corporate America.
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After a rally that drove the S&P 500 up as much as 1.2%, the gauge turned lower around 1 p.m. New York time. Nearly 30 minutes later, the US equity benchmark was back in the green.
Investors keeping a close eye on any headline around the tariff spat between the US and China quickly refocused on the fundamental factors that have powered an over $15 trillion surge in the S&P 500 from April’s meltdown.
As the earnings season got under way, Morgan Stanley and Bank of America Corp. jumped on solid results. Meantime, positive comments on artificial intelligence from ASML Holding NV boosted chipmakers. In late hours, United Airlines Holdings Inc. reported better-than-expected earnings.
“Investors who are buying the dip are still driving the action, keeping sentiment firm even as technical indicators show signs of strain,” said Mark Hackett at Nationwide.
Treasuries stalled after a rally that drove two-year yields to their lowest since 2022. Gold topped $4,200.
Despite the market resilience, an escalating tit-for-tat between Washington and Beijing has renewed investors’ fears that the two economic giants could soon be locked in a full-blown trade war.
Treasury Secretary Scott Bessent proposed a longer pause on high US tariffs on Chinese goods in return for Beijing putting off its recently announced plan to tighten limits on critical rare earths. Speaking in a CNBC event, Bessent said that as far as he’s aware, President Donald Trump “is a go” on meeting President Xi Jinping later this month.
Fed Governor Stephen Miran noted that trade tensions have increased uncertainty in the outlook for growth, making it more important for officials to lower rates quickly.
“There’s now more downside risks than there was a week ago, and I think it’s incumbent upon us as policymakers to recognize that should get reflected in policy,” Miran said Wednesday during an event organized by CNBC. Higher uncertainty around trade policies between China and the US have introduced a “new tail risk,” he said.
Despite the recent tariff noise, fundamentals remain strong, according to Max Kettner at HSBC.
Kettner also noted he’s heading into 2026 with a continued “risk-on stance” as short-term US growth expectations look easy to beat.
“Q3 earnings results are important, but they are backward-looking. What I’ll be watching closely is forward guidance, particularly any signs of optimism,” said Stephen Kates at Bankrate. “Positive guidance can be self-reinforcing for Wall St. and Main St. Rising stock prices boost business and consumer confidence, which in turn, encourages more real-economy spending.”
To Sam Stovall at CFRA, the market might not be finished digesting recent gains.
“More consolidation may be on the horizon, as breadth has narrowed, but not enough to signal an oversold condition,” he said.
However, should an additional decline materialize, he recommends taking advantage of the price weakness, as no post-World War II deep correction that occurred early in the year was followed in the same year by another selloff in excess of 10%. The average decline was 8.5%.
“The third-quarter earnings season should be supportive of our view that the bull market remains intact driven by the combination of durable earnings growth and Fed rate cuts,” said David Lefkowitz at UBS Global Wealth Management.
Retail traders’ demand for call options has outpaced puts for 24 consecutive weeks, which ties with November 2023 for the longest streak ever, said Citadel Securities’ Scott Rubner, citing data going back to 2020.
Their conviction in the stock market “remains extraordinary,” Rubner wrote.
“Although we believe a consolidation phase is probable as investors focus on Q3 earnings, they should continue to seek opportunities to ‘buy the dip’ as we enter the fourth year of this bull market,” said Craig Johnson at Piper Sandler.
Corporate Highlights:
United Airlines Holdings Inc. expects brand-loyal flyers and demand for its premium seats to drive profit through the end of the year, maintaining momentum after reporting better-than-expected earnings for the third quarter. Morgan Stanley’s stock traders soared past expectations in the third quarter, topping all of its largest rivals as US President Donald Trump’s policies kept markets on edge throughout the period. Shares of the company jumped the most in more than six months. As concerns begin to emerge about the quality of US credit, Morgan Stanley reported a noteworthy figure for loan-loss provisions: zero dollars. Bank of America Corp.’s third-quarter earnings beat estimates as investment-banking activity surged amid a long-awaited comeback in M&A and net interest income topped analysts’ estimates. PNC Financial Services Group Inc.’s more-expensive commercial deposits grew faster in the third quarter, a drag on the net interest margin that pushed the bank further from its year-end goal. Walmart Inc.’s US CEO said shoppers are spending at a healthy rate and remain resilient, despite warning signs from banks about the economy. Nvidia Corp. added another bull on Wednesday, as HSBC upgraded the chipmaker to buy from hold, citing the ongoing growth of artificial intelligence. Apple Inc. rolled out updated versions of the iPad Pro, Vision Pro and entry-level MacBook Pro with the new M5 chip, refreshing the products just ahead of the all-important holiday season. Apple is preparing to expand its manufacturing operations in Vietnam as part of a push into the smart home market and an ongoing effort to lessen its dependence on China. ASML Holding NV said demand for its most sophisticated chip-making machines is soaring thanks to the artificial intelligence boom, signaling optimism just months after the semiconductor equipment maker warned the trade war could stymie growth. Meta Platforms Inc. removed a Facebook group used to share information about Immigration and Customs Enforcement agents in Chicago after a request from the Justice Department. Nscale, a data center developer focused on artificial intelligence, has agreed to build a site for Microsoft Corp. in Texas, the fourth such deal between the companies in the last two months. Dollar Tree Inc. projected earnings per share to gain at a compound rate of as much as 15% over the next three years. Papa John’s International Inc. jumped as Reuters reports that Apollo Global Management submitted a bid within the last week to take the pizza chain operator private at $64 per share. AppLovin Corp. said it has shut down a product linked to user and short-seller allegations that apps were being downloaded to mobile phones without consent. Investors led by BlackRock Inc.’s Global Infrastructure Partners agreed to buy Aligned Data Centers in a $40 billion deal, one of the asset manager’s largest infrastructure investments ever that comes as Wall Street races to claim a stake in the artificial-intelligence boom. Lone Star Funds plans to acquire US plastic parts and equipment maker Hillenbrand Inc. in an all-cash transaction valuing the target at around $3.8 billion including debt. Novo Nordisk A/S agreed to pay Omeros Corp. as much as $2.1 billion for rights to an experimental rare-disease drug, as the maker of Ozempic continues to use deal-making to build its pipeline. Abbott Laboratories cut the top end of its 2025 earnings guidance by 2 cents a share, just as the Trump administration launched an investigation into the medical device sector that could lead to tariffs on its biggest product category. Volkswagen AG truck brand Scania AB has opened a €2 billion ($2.3 billion) manufacturing facility in China to supply trucks in the world’s biggest market as well as export to Asia. Ryanair Holdings Plc slashed its winter capacity to Berlin and other German cities by 800,000 seats in a dispute over the country’s aviation taxes and access costs. Waymo is planning to launch its driverless ride-hailing service in London next year, marking its second international expansion and its first in Europe. TotalEnergies SE said its third-quarter profit and cash flow may rise slightly after oil and gas output increased and refining margins jumped from a year earlier, outweighing a drop in crude prices. SMBC Nikko Securities Inc.’s planned integration with Jefferies Financial Group Inc. will likely go beyond just bringing together their equity businesses, with ties also possible in other investment banking areas, its chief executive officer said. Global investors are ramping up bets on Taiwan Semiconductor Manufacturing Co. ahead of its earnings, confident that the world’s leading chip foundry will remain one of the biggest winners from the AI spending boom. How should regulators react to the blurring line between investing and gambling? Let us know in the latest Markets Pulse survey.
What Bloomberg Strategists say…
“Equities couldn’t quite finish the job of rallying from steep opening losses Tuesday, but this morning are in an ebullient mood after ASML’s strong sales figures underscored the strength of AI investment demand. It remains very much a bull market from that perspective, and the evidence of the last couple of years suggests that it will take a steady diet of bad news elsewhere to keep the market down for very long.”
—Cameron Crise, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 rose 0.4% as of 4 p.m. New York time The Nasdaq 100 rose 0.7% The Dow Jones Industrial Average was little changed The MSCI World Index rose 0.6% Bloomberg Magnificent 7 Total Return Index rose 0.8% Philadelphia Stock Exchange Semiconductor Index rose 3% The Russell 2000 Index rose 1% KBW Bank Index rose 0.4% Currencies
The Bloomberg Dollar Spot Index fell 0.3% The euro rose 0.3% to $1.1645 The British pound rose 0.5% to $1.3393 The Japanese yen rose 0.4% to 151.26 per dollar Cryptocurrencies
Bitcoin fell 1.5% to $111,397.42 Ether fell 3.3% to $3,986.02 Bonds
The yield on 10-year Treasuries was little changed at 4.04% Germany’s 10-year yield declined four basis points to 2.57% Britain’s 10-year yield declined five basis points to 4.54% The yield on 2-year Treasuries advanced two basis points to 3.50% The yield on 30-year Treasuries was little changed at 4.63% Commodities
West Texas Intermediate crude fell 0.4% to $58.47 a barrel Spot gold rose 1.6% to $4,209.88 an ounce ©2025 Bloomberg L.P.
