On Monday, stocks soared to new heights following a weekend of diplomatic discussions aimed at easing tensions between the United States and China. This positive momentum is setting the stage for a potential trade deal between President Donald Trump and Chinese President Xi Jinping later this week. The S&P 500 experienced a significant climb, rising by 1.23% to close at 6,875.16, marking its first-ever close above the 6,800 threshold. Similarly, the Nasdaq Composite surged 1.86% to end at 23,637.46, thanks to a notable uptick in technology stocks, particularly those in the chip sector, including Nvidia. Meanwhile, the Dow Jones Industrial Average increased by 337.47 points, or 0.71%, to finish at 47,544.59. All three major indices reached record highs, alongside the Russell 2000, which tracks small-cap stocks.
Speaking from the ASEAN Summit in Kuala Lumpur, Treasury Secretary Scott Bessent expressed optimism about the discussions, stating, "I think we have a very successful framework for the leaders to discuss on Thursday." The proposed framework could involve delaying China’s rare earth export restrictions, which had contributed to recent trade tensions. It may also include the withdrawal of Trump’s proposed 100% tariffs on Chinese goods slated to take effect on November 1, alongside a renewal of Chinese purchases of American soybeans. Additionally, a resolution regarding the TikTok dispute is anticipated, which could allow the U.S. to reach an agreement concerning the domestic version of the popular social media app.
The technology sector, particularly chipmakers, was a key driver of the market rally. Shares of Nvidia and other notable firms like Broadcom rose more than 2%. Tesla shares climbed by 4.3%, while Qualcomm surged an impressive 11% after announcing new artificial intelligence chips, positioning itself in competition with Nvidia and AMD. According to Sam Stovall, chief investment strategist at CFRA Research, "If we end up with some sort of a favorable trade agreement between the U.S. and China, then the two largest trading partners are once again working together," which would be a positive sign for the market.
Investors are also looking ahead to earnings reports from major Big Tech companies. Several of the "Magnificent Seven," including Alphabet, Amazon, Apple, Meta Platforms, and Microsoft, are set to announce their third-quarter results this week. Additionally, many anticipate a reduction in the Federal Reserve's benchmark interest rate on Wednesday, especially after recent inflation data came in cooler than expected, according to the Bureau of Labor Statistics. Stovall added, "Small and mid-caps are trading at a very steep discount to large caps, and should we continue with rate cuts and the prospect of no recession, they should also perform well."
In summary, all three major U.S. indices closed at record levels on Monday. The S&P 500 rose 1.23% to end at 6,875.16, while the Nasdaq Composite gained 1.86%, closing at 23,637.46. The Dow Jones Industrial Average increased by 337.47 points, or 0.71%, reaching 47,544.59. Overall, Monday’s market performance reflects a bullish sentiment as investors remain hopeful for a U.S.-China trade resolution and favorable economic indicators.
As the earnings season progresses, Wolfe Research noted that while many companies in the S&P 500 have reported positive earnings and revenue beats, their stocks have not seen substantial price increases post-reporting. Analyst Chris Senyek remarked, "Our sense is estimates were likely too low as tariff policy uncertainty continues to linger," highlighting the need for a more favorable macroeconomic environment.
In other sector news, Keurig Dr Pepper is on track for its best day since 2020, with shares rising more than 7% following a stronger-than-expected revenue report. The company reported $4.31 billion in third-quarter revenue, surpassing analyst expectations.
As analysts continue to assess the market landscape, companies like AngloGold Ashanti and Fermi have garnered attention. Citi initiated coverage on AngloGold Ashanti with a buy rating, while Fermi, an AI data center developer, has received bullish endorsements from several Wall Street firms following its IPO. The market remains dynamic, with both opportunities and challenges ahead.
With so much happening in the financial markets, investors must stay informed to navigate the complexities of trade, technology, and economic policy effectively.
