The S&P 500 Index ($SPX) (SPY) rose +0.84%, the Dow Jones Industrials Index ($DOWI) (DIA) rose +0.41%, and the Nasdaq 100 Index ($IUXX) (QQQ) rose +1.49%. December E-mini S&P Futures (ESZ25) rose +0.87% and December E-mini Nasdaq Futures (NQZ25) rose +1.51%.
U.S. stocks rose today after U.S. and Chinese negotiators, who met over the weekend in Malaysia, said they had reached a tentative trade deal that will be finalized at Thursday’s summit between Presidents Trump and Xi on the sidelines of the Asia-Pacific Economic Cooperation conference in South Korea. Treasury Secretary Bessent said the deal means the U.S. threat of a 100% tariff on U.S. imports from China, set to begin Nov. 1, is “effectively off the table.” Meanwhile, China agreed not to restrict the export of rare earth metals for at least a year and to buy a “substantial” amount of American soybeans. The two sides also made progress on shipping rates and U.S. demands that China crack down on the export of fentanyl and precursors to the United States. The two sides could also reach a deal that would allow American consumers to continue accessing TikTok.
Treasury Secretary Bessent said today that the field of candidates for the next chairman of the Federal Reserve has been narrowed to Christopher Waller, Kevin Warsh, Kevin Hassett, Michelle Bowman and Rick Rieder. President Trump is expected to announce a decision on a new Fed chair by the end of the year to replace current Fed Chair Powell, whose term as Fed chair ends May 15, 2026. Powell’s separate term as Fed governor runs through January 2028, although he faces pressure from Trump to also step down as Fed governor so Trump can appoint a more dovish Fed governor.
This is a busy week, with the FOMC meeting on Tuesday and Wednesday, when it is expected to reduce its federal funds rate target by -25 bps. Additionally, five of the Magnificent Seven companies report earnings this week: Alphabet, Meta and Microsoft report on Wednesday, and Apple and Amazon.com report on Thursday.
There is some support from last Friday’s September US CPI report of +3.0% YoY for both nominal and core figures, which was slightly weaker than expectations for both of +3.1% YoY.
Trade relations with Canada are a negative factor for stocks after President Trump said Saturday he will impose a new 10% tariff on U.S. imports from Canada as punishment for last week’s anti-tariff announcement released by the Ontario provincial government. Trump initially said he was only halting U.S. trade negotiations with Canada because of the announcement, but he escalated the punishment over the weekend by imposing a new 10% tariff, even though Ontario had agreed to pause the ad campaign.
Ontario’s ad featured former U.S. President Reagan speaking in a 1987 speech in favor of free trade and against tariffs, calling tariffs an outdated idea that stifles innovation, raises prices and hurts American workers. Trump claimed the ad was misleading and said it was designed to influence the U.S. Supreme Court ahead of Nov. 5 oral arguments on the legality of Trump’s reciprocal tariffs. Lower courts have already deemed Trump’s reciprocal tariffs illegal, ruling that they are based on a misleading claim of emergency authority. If the US Supreme Court upholds those rulings, the US government will have to refund tariffs already collected, and Trump’s power to impose tariffs will be limited to well-founded sections of US trade law.
The US government shutdown continues into its fifth week, weighing on market confidence and the US economy. The government shutdown is delaying the release of government reports, including all recent weekly jobless claims reports, September unemployment and payroll report, August trade balance, September retail sales, September PPI, September housing starts, September industrial production, September leading indicators, and others. Bloomberg Economics estimates that 640,000 federal workers will be laid off during the shutdown, which would expand jobless claims and push the unemployment rate to 4.7%.
Markets are focused on earnings results as the third quarter earnings season continues. According to Bloomberg Intelligence, 84% of S&P 500 companies that have reported so far have beaten estimates, on track for the best quarter since 2021. However, third-quarter earnings are expected to have increased +7.2% year-over-year, the smallest increase in two years. Additionally, third quarter sales growth is expected to slow to +5.9% year-on-year from +6.4% in the second quarter.
Foreign stock markets are higher today. The Euro Stoxx 50 rises +0.62%. China’s Shanghai Composite closed up +1.18%. Japan’s Nikkei Stock 225 closed up +2.46%.
Interest rates
The December 10-year Treasury bond (ZNZ5) is down -7 ticks. The 10-year Treasury yield has risen +2.3 bps to 4.024%. Treasury bond prices are trading lower due to the US-China trade deal, which reduced demand for safe haven Treasury securities and is positive for the US and Chinese economies. Bond prices are also being pressured by the rally in US stocks and today’s +0.7 bp increase in the implied 10-year inflation expectations rate.
Treasuries are supported by the ongoing US government shutdown, which could lead to additional job losses, reduced consumer spending and a weakened US economy, potentially allowing the Federal Reserve to continue cutting interest rates.
Markets are pricing in a 99% chance of a -25bp rate cut at this week’s FOMC meeting on Tuesday and Wednesday (October 28-29).
European government bond yields are mixed. The 10-year German bond yield has risen +0.3 bp to 2.629%. The 10-year UK bond yield is down -2.0bp to 4.412%.
The swaps price in a 1% chance that the ECB will cut rates by -25 bps at its next policy meeting on October 30.
US Stock Engines
Magnificent Seven stocks are trading higher today, led by a +4% gain in Tesla (TSLA) and +2% gains in Alphabet (GOOG) and Nvidia (NVDA).
Chip stocks are trading higher across the board today, led by a +12.6% gain in Qualcomm (QCOM) on news of a new AI chip and line of computers to compete with Nvidia. Marvell Technology (MRVL) is up more than +5%. Arm Holdings (ARM), ON Semiconductors (ON), and Lam Research (LRCX) rose more than +4%.
Cryptocurrency stocks are trading higher today, supported by today’s gains of over +3% in Bitcoin (^BTCUSD) and +5% in Ethereum (^ETHUSD). Riot Platforms (RIOT) is up over +4% and Coinbase (COIN) is up over +2%.
Avidity Biosciences (RNA) is up +42% following news that Switzerland-based Novartis plans to buy the company in a deal worth $12 billion. Novartis ADR (NVS) shares are down -1%.
Ohio-based Huntington Bancshares (HBAN) agreed to buy Cadence Bank (CADE) for $7.4 billion in an all-stock deal to expand into the Southeast and South. Huntington is down more than -2% while Cadence is up more than +4%.
American Water Works (AWK) is down -3% and Essential Utilities (WTRG) is down -0.9% following news that the two companies have finalized AWK’s $12 billion purchase of Essential Utilities in an all-stock deal.
Keurig Dr Pepper (KDP) is up more than +7% after raising its full-year net sales guidance.
Lululemon Athletica (LULU) is up more than 3% on news of a deal with the National Football League and sports retailer Fanatics Inc to develop a line of fan apparel.
Robinhood Markets (HOOD) is up more than 4% after CICC gave the brokerage a new outperform rating.
Newmont (NEM) is down more than -6% as the company seeks to gain control of Barrick’s gold mines in Nevada.
Boeing (BA) is trading slightly higher despite St. Louis factory workers narrowly rejecting a new five-year contract that would have ended a three-month strike that has disrupted the company’s main military manufacturing operations.
Earnings Reports (10/27/2025)
Keurig Dr Pepper Inc (KDP), Revvity Inc (RVTY), Arch Capital Group Ltd (ACGL), Whirlpool Corp (WHR), Simpson Manufacturing Co Inc (SSD), Alexandria Real Estate Equities (ARE), Brixmor Property Group Inc (BRX), Nucor Corp (NUE), NOV Inc (NOV), Hartford Insurance Group Inc/T (HIG), Brown & Brown Inc (BRO), Cincinnati Financial Corp (CINF), Crane Co (CR), F5 Inc (FFIV), Universal Health Services Inc (UHS), Amkor Technology Inc (AMKR), FTAI Aviation Ltd (FTAI), Principal Financial Group Inc (PFG), Kilroy Realty Corp (KRC), Welltower Inc (WELL), Avis Budget Group Inc (CAR), Cadence Design Systems Inc (CDNS), Confluent Inc (CFLT), Olin Corp (OLN), Waste Management Inc (WM), BioMarin Pharmaceutical Inc (BMRN), NXP Semiconductors N.V. (NXPI).
On the date of publication, Rich Asplund had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. For more information, see Barchart’s Disclosure Policy here.
