U.S. Markets Mixed as Fed Signals Caution, Trump–Xi Talks Boost Trade Optimism

Index Update:  U.S. stock futures fluctuated on Thursday as investors weighed President Trump’s meeting with China’s Xi Jinping and mixed Big Tech earnings. Trump agreed to halve fentanyl tariffs to 10%, while China pledged to ease rare earth restrictions and resume soybean purchases. Alphabet surged nearly 7% on strong results, while Meta fell over 7% due to a $15.93 billion charge tied to Trump’s new bill, and Microsoft dropped more than 4% after its OpenAI investment cut profits by $3.1 billion. Markets now await Apple and Amazon’s earnings. Meanwhile, the Fed’s quarter-point rate cut was as expected, though Chair Powell expressed caution about further cuts this year.

Market Movers:  On Wednesday, the top gainers were Cambium Networks Corporation (+377.35%), followed by ProPetro Holding Corp. (+52.05%). On the contrary Stride, Inc. (-54.37%), and Varonis Systems, Inc (-48.67%) declined the most the same day.

Commodities Update:  WTI crude fell toward $60 and Brent toward $64 per barrel on Thursday, erasing prior gains as the Trump–Xi summit made progress on trade but omitted energy discussions. Despite some optimism for global growth, uncertainty over supply persisted after the U.S. tightened sanctions on Russian oil firms and urged China to cut imports. Markets now await the November 2 OPEC+ meeting, where a modest output hike is under consideration. Both benchmarks remain on track for a third straight monthly decline amid oversupply concerns. Meanwhile, gold prices climbed toward $3,990 per ounce, snapping a four-day losing streak, supported by a 28% jump in central bank purchases to 220 tons in Q3, led by Kazakhstan. Gains were capped after the U.S. and China reached a limited trade truce, and Fed Chair Powell signaled a reduced likelihood of another rate cut this year.

Macro Updates:  President Trump and Chinese President Xi Jinping concluded a 90-minute meeting in South Korea, which Trump described as “amazing,” citing agreements on trade, tariffs, and rare-earth minerals. The talks paved the way for further dialogue, with Trump planning a China visit in April and hinting at a potential trade deal soon. He announced a 10% cut in fentanyl tariffs in exchange for China’s cooperation on the opioid crisis and said Beijing would resume large U.S. soybean purchases. Trump also claimed the two leaders resolved rare-earth restrictions and agreed to collaborate on the Ukraine conflict, though China has not yet released an official statement.

Bonds Commentary:  The 10-year U.S. Treasury yield rose 10 bps to 4.07% after Fed Chair Powell downplayed the likelihood of further rate cuts this year. Although the Fed delivered an expected 25 bps cut in October and ended quantitative tightening, Powell’s cautious tone pushed yields higher. The Fed will halt its balance sheet runoff in December, reinvesting maturing Treasuries and MBS into Treasury bills to ease funding market pressures. Despite this, futures still price in three more cuts by July 2026. Earlier in October, growth concerns and a potential government shutdown had driven the 10-year yield to a one-year low of 3.95%.

Futures Update:  U.S. stock futures edged slightly lower on Thursday as investors weighed major tech earnings, the Federal Reserve’s rate cut decision, and an upcoming meeting between Presidents Trump and Xi. Dow futures were down 0.2%, S&P 500 futures slipped 0.1%, and Nasdaq 100 futures fell 0.1%. On Wednesday, markets closed mixed — the Dow dropped 0.2%, the S&P 500 was flat, while the Nasdaq rose 0.6%, driven by Nvidia’s record-breaking rally that lifted its market value to $5 trillion.

After delivering a strong performance throughout much of the trading session, stocks experienced significant volatility in the late trading hours on Wednesday. The S&P 500 edged down by 0.28 points, less than a tenth of a percent, closing at 6,890.60. From a technical perspective, the index is currently near key resistance levels for the week and may remain range-bound with a sideways trend in the near term, staying choppy. Additionally, the 14-day Relative Strength Index (RSI) is climbing above the midpoint, suggesting a positive outlook. Key support levels are around 6,770, with resistance anticipated near 6,955.