U.S. Stocks Rally on Easing Trade Risks and Strong Q3 Earnings

Stocks Rally on Easing Trade Tensions and Strong Q3 Earnings

The S&P 500 rose +1.07%, the Dow Jones gained +1.12%, and the Nasdaq 100 climbed +1.30%, hitting weekly highs. Market optimism strengthened after President Donald Trump said that relations with China “will be fine.” The easing tone between the U.S. and China boosted risk appetite, along with expectations that corporate earnings for Q3 will continue to surprise to the upside.

U.S.–China Negotiations

Treasury Secretary Elizabeth Bessent confirmed that both sides will hold talks in Malaysia this week ahead of the upcoming meeting between Presidents Trump and Xi Jinping at the APEC summit in South Korea. Against this backdrop, major global indexes—including European and Japanese markets—hit record highs.

Strong Chinese Data

China delivered upbeat economic data: Q3 GDP rose +1.1% q/q and +4.8% y/y (above expectations of +0.8% and +4.7%). Industrial production accelerated to +6.5% y/y, and the unemployment rate fell to 5.2%. These numbers boosted expectations of stronger global growth and supported commodity and industrial stocks.

Government Shutdown Impact

Meanwhile, the U.S. government shutdown has entered its fourth week, delaying key economic data releases such as jobless claims and inflation reports. Bloomberg estimates that around 640,000 federal employees are currently furloughed, potentially pushing the unemployment rate up to 4.7%.

Earnings and Fed Outlook

According to Bloomberg Intelligence, 85% of S&P 500 companies that have reported so far have beaten profit forecasts. Still, overall Q3 earnings growth is expected at +7.2%—the smallest increase in two years—while revenue growth is projected at +5.9%, down from +6.4% in Q2. Markets are fully pricing in a 25 bps rate cut at the next Fed meeting on October 28–29.

Bond Yields and Interest Rates

The 10-year U.S. Treasury yield fell to 3.98% as investors anticipate further monetary easing. European yields followed suit: the German 10-year bund yield declined to 2.58%, while the U.K. 10-year gilt yield fell to 4.51%.

Tech Leads the Rally

The technology sector once again led the market higher. Apple (+3%), Meta (+2%), Amazon, Alphabet, and Tesla all posted gains above 1%. Chipmakers rallied as well: Super Micro Computer (+5%), ON Semiconductor, and KLA Corp (+4%), while AMD, ARM, and Intel rose more than 2%.

Crypto-related stocks (Coinbase, Riot, MicroStrategy) also advanced as Bitcoin rebounded +3% from a 3.75-month low.

Notable Movers

Celcuity (+35%) surged after reporting “statistically significant” results in its breast cancer drug trial.

Cleveland-Cliffs (+21%) narrowed its Q3 loss and announced a deal with a major global steel producer.

Cooper Cos (+4%) rallied on reports of potential strategic changes.

Among decliners: AppLovin (-5%) on regulatory concerns, and Progressive (-2%) after a downgrade by Morgan Stanley.

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