On Monday, October 27, for the second consecutive trading day, the three major Wall Street indexes hit new closing highs. Investors held optimistic expectations for the US-China trade agreement and anticipated a series of earnings reports from tech giants this week, along with the widely expected interest rate cut by the United States.
President Trump and Chinese Communist Party leader Xi Jinping are expected to meet on Thursday, with the possibility of reaching a new framework agreement on trade that could ease trade tensions between the two countries. This news has eased market anxiety, leading the “fear index” VIX to drop to its lowest level in about a month.
Following two days of trade negotiations in Malaysia, US Treasury Secretary Scott Bessent discussed the framework of the US-China trade agreement in a weekend television interview. According to him, the agreement would eliminate the need for the US to impose 100% tariffs on Chinese goods, while China would delay the implementation of export controls on rare earths and increase purchases of American soybeans.
Scott Wren, a strategist at Wells Fargo Investment Research Institute, mentioned that Bessent’s comments, along with the upcoming meeting, have strengthened hopes for easing tensions between the US and China.
This week, five US tech giants, including Microsoft, Apple, Alphabet, Amazon, and Meta, will report earnings. The positive outlook is largely based on expectations of capital spending on artificial intelligence (AI), with the new season’s earnings expected to determine whether the market still has upward momentum.
Wren stated, “This week, five out of the ‘Big Seven’ will release earnings reports. The market is hoping to hear that these AI capital expenditures are paying off, with AI driving revenue and profits.”
On Monday, the Dow Jones Industrial Average rose 337.47 points, or 0.71%, to close at 47,544.59. The S&P 500 index gained 83.47 points, or 1.23%, to 6,875.16, marking the first time this index has closed above 6,800 points. The Nasdaq index rose 432.59 points, or 1.86%, to close at 23,637.46.
Among tech stocks, Qualcomm saw the largest increase as its stock soared by 11% after releasing two AI chips that will go into production next year. AI leader Nvidia also rose by 2.8%.
In the non-essential consumer sector, closing up by 1.5%, Tesla led the gains, rising by 4.3% due to the optimistic sentiment surrounding the US-China negotiations.
Christopher Brown, Vice President of Private Wealth Management at Synovus, cautioned that Tesla’s uptrend could be short-lived, as even with the “best US-China trade agreement,” the stock’s valuation remains high.
Underperforming sectors included daily consumer goods, which fell by 0.27%, and raw materials, which closed down by 0.25%.
Due to the optimistic outlook for the US-China agreement, concerns about rare earth supply disruptions have eased, resulting in declines in rare earth mining stocks. Critical Metals stock dropped by 13.7%, NioCorp Developments by 11.5%, and Ramaco Resources by 2.6%.
Last week’s relatively mild inflation data almost confirms the Federal Reserve’s expected interest rate cut of 25 basis points on Wednesday.
Argentina held midterm congressional elections over the weekend, where the ruling party “Let’s Move Forward” secured a majority in the lower house, becoming the biggest winner. This has expanded the influence of President Javier Milei in the Argentine parliament, driving up the share prices of Argentine companies listed in the US.
At the New York Stock Exchange, the ratio of rising stocks to falling stocks was 1.74 to 1, with 659 stocks hitting 52-week highs and 69 hitting 52-week lows.