The S&P 500 Index ($SPX) (SPY) on Wednesday closed unchanged, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.16%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up by +0.41%. December E-mini S&P futures (ESZ25) fell -0.06%, and December E-mini Nasdaq futures (NQZ25) rose +0.37%.
US stock indexes gave up an early advance on Wednesday and settled mixed. Stocks fell back from their best levels on Wednesday after T-note yields jumped when Fed Chair Powell downplayed the prospect of further interest rate cuts this year.
Stocks initially rallied on Wednesday, with the S&P 500, the Dow Jones Industrial Average, and the Nasdaq 100 posting new all-time highs. Easing global trade tensions supported stocks on Wednesday after President Trump said he expects to lower tariffs on Chinese goods over the fentanyl crisis. The Wall Street Journal reported late Tuesday that President Trump was considering cutting the 20% tariff to as low as 10% on Chinese goods as he expects China would be "doing things" and work with him directly to address the export of precursor chemicals critical to manufacturing fentanyl. Also, the US and South Korea finalized a trade deal today that will see South Korea make $150 billion in shipbuilding investments in the US, and the US will cap tariffs on South Korean goods at 15%.
Strength in semiconductor stocks was a supportive factor for stocks on Wednesday after Nvidia rose by more than +2% after President Trump said he was open to providing China with access to Nvidia's Blackwell AI processor as part of a trade deal. Chinese Foreign Ministry spokesman Guo Jiakun said China was ready to "inject fresh momentum" into the US relationship.
US MBA mortgage applications rose +7.1% in the week ended October 24, with the purchase mortgage sub-index up +4.5% and the refinancing sub-index up +9.3%. The average 30-year fixed rate mortgage fell -7 bp to a 13-month low of 6.30% from 6.37% in the prior week.
US Sep pending home sales were unchanged m/m, weaker than expectations of a +1.2% m/m increase.
As expected, the FOMC on Wednesday cut the federal funds target range by -25 bp to 3.75%-4.00% from 4.00%-4.25%. The Fed also said it will end quantitative tightening and stop shrinking its balance sheet on December 1.
The FOMC post-meeting statement said that "downside risks to employment rose in recent months," and that "inflation has moved up since earlier in the year and remains somewhat elevated."
Fed Chair Powell cautioned against the assumption that the Fed will cut interest rates again in December, saying, "A further reduction in the policy rate at the December FOMC meeting is not a foregone conclusion, far from it."
The markets are discounting a 67% chance of another -25 bp rate cut at the next FOMC meeting on December 9-10. The markets are discounting an overall 74 bp rate cut by the end of 2026 to 3.38% from the current effective federal funds rate of 4.12%.
Stocks have carry-over support from Monday's news that US and Chinese negotiators, who met over the weekend in Malaysia, reached a tentative trade agreement that is expected to be officially announced at Thursday's summit between Presidents Trump and Xi on the sidelines of the APEC conference in South Korea. Treasury Secretary Bessent said the agreement means the US threat of a 100% tariff on US imports from China, set to start November 1, is "effectively off the table." Meanwhile, China agreed not to restrict the export of rare earth metals for at least one year and to buy a "substantial" amount of US soybeans. The two sides also made progress on shipping fees and US demands that China crack down on the export to the US of fentanyl and precursors. The two sides may also reach an agreement that would allow US consumers to continue to access TikTok.
This is a heavy earnings week, with 173 of the S&P 500 companies reporting earnings. Notably, five of the Magnificent Seven companies report earnings this week. Alphabet, Meta, and Microsoft report after the markets close on Wednesday, and Apple and Amazon.com report on Thursday. Q3 earnings have been running strong so far. According to Bloomberg Intelligence, 84% of the S&P 500 companies that have reported so far have beaten forecasts, on course for the best quarter since 2021. However, Q3 profits are expected to have risen by +7.2% y/y, the smallest increase in two years. Also, Q3 sales growth is projected to slow to +5.9% y/y from +6.4% in Q2.
The markets are monitoring US-Canada trade relations after President Trump said on Saturday that he would impose a new 10% tariff on US imports from Canada as punishment for last week's anti-tariff advertisement released by the provincial government of Ontario that featured former President Reagan's criticism of tariffs. Mr. Trump initially said he was halting US trade negotiations with Canada because of the ad, but he escalated the punishment this past weekend by imposing a new 10% tariff, even though Ontario had agreed to pause the ad campaign.
Regarding President Trump's reciprocal tariffs, markets are looking ahead to oral arguments at the Supreme Court scheduled for November 5 on whether the tariffs are legal. Lower courts have already ruled that Mr. Trump's reciprocal tariffs are illegal, finding they are based on a specious claim of emergency authority. If the US Supreme Court upholds those rulings and strikes down the tariffs, then the US government will have to refund the reciprocal tariffs already collected, and Mr. Trump's power to impose tariffs will be limited to well-founded sections of US trade law. Observers expect the US Supreme Court to announce its final ruling on the reciprocal tariffs by late 2025 or early 2026.
The US government shutdown continues into its fifth week, weighing on market sentiment and the US economy. The government shutdown is delaying the release of government reports, including all the recent weekly unemployment claims reports, the September unemployment and payroll report, Aug trade balance, Sep retail sales, Sep PPI, Sep housing starts, Sep industrial production, Sep leading indicators, and others. Bloomberg Economics estimates that 640,000 federal workers will be furloughed during the shutdown, which would expand jobless claims and push the unemployment rate up to 4.7%.
Overseas stock markets settled higher on Wednesday. The Euro Stoxx 50 rallied to a new record high and closed up +0.03%. China's Shanghai Composite climbed to a 10-year high and closed up +0.70%. Japan's Nikkei Stock 225 rose to a new record high and closed up sharply by +2.17%.
Interest Rates
December 10-year T-notes (ZNZ5) on Wednesday closed down by -18 ticks. The 10-year T-note yield rose +8.0 bp to 4.056%. T-note prices tumbled to a 2.5-week low on Wednesday, and the 10-year T-note yield jumped to a 2.5-week high of 4.074%. T-notes continue to see reduced safe-haven demand after Monday's news of a preliminary US-China trade agreement.
Losses in T-notes accelerated Wednesday afternoon after the FOMC post-meeting statement said, "Inflation has moved up since earlier in the year and remains somewhat elevated." Also, hawkish comments from Fed Chair Powell undercut T-note prices when he said, "A further reduction in the policy rate at the December FOMC meeting is not a foregone conclusion."
T-note prices still have underlying support from the ongoing US government shutdown, which could lead to additional job losses, reduced consumer spending, and a weakened US economy, potentially allowing the Fed to continue cutting interest rates.
European government bond yields moved lower on Wednesday. The 10-year German bund yield fell -0.2 bp to 2.621%. The 10-year UK gilt yield fell -0.8 bp to 4.392%.
Swaps are discounting a 1% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30.
US Stock Movers
Chipmakers moved higher Wednesday after President Trump said he'll discuss Nvidia's Blackwell artificial intelligence processors with Chinese President Xi Jinping on Thursday. Broadcom (AVGO), Lam Research (LRCX), and Applied Materials (AMAT) closed up more than +3%. Also, Nvidia (NVDA), Micron Technology (MU), KLA Corp (KLAC), and Advanced Micro Devices (AMD) closed up more than +2%. In addition, Marvell Technology (MRVL) and ASML Holding NV (ASML) closed up more than +1%.
Teradyne (TER) closed up more than +20% to lead gainers in the S&P 500 after reporting Q3 net revenue of $769.2 million, better than the consensus of $745.1 million, and forecasting Q4 revenue of $920 million-$1.0 billion, well above the consensus of $820.5 million.
Seagate Technology Holdings Plc (STX) closed up more than +19% after reporting Q1 adjusted EPS of $2.61, above the consensus of $2.37, and forecasting Q2 adjusted EPS of $2.55-$2.95, the midpoint above the consensus of $2.67.
Bloom Energy (BE) closed up more than +16% after reporting Q3 adjusted EPS of 15 cents, stronger than the consensus of 7.9 cents.
Centene (CNC) closed up more than +12% after reporting an unexpected Q3 adjusted EPS profit of 50 cents versus expectations of a loss of -15 cents, and raising its full-year adjusted EPS forecast to $2.00 from $1.75, stronger than the consensus of $1.67.
Caterpillar (CAT) closed up more than +11% to lead gainers in the Dow Jones Industrials after reporting Q3 adjusted EPS of $4.95, stronger than the consensus of $4.51.
American Electric Power (AEP) closed up more than +6% to lead gainers in the Nasdaq 100 after forecasting 2026 operating EPS of $6.15 to $6.35, the midpoint above the consensus of $6.29.
Cognizant Technology Solutions (CTSH) closed up more than +5% after reporting Q3 revenue of $5.42 billion, stronger than the consensus of $5.32 billion, and raising its full-year revenue forecast to $21.05 billion-$21.10 billion from a previous estimate of $20.7 billion-$21.1 billion, above the consensus of $20.96 billion.
Fiserv (FI) closed down more than -44% to lead losers in the S&P 500 after cutting its full-year adjusted EPS estimate to $8.50-$8.60 from a previous estimate of $10.15-$10.30.
Avantor (AVTR) closed down more than -23% after reporting Q3 net sales of $1.62 billion, below the consensus of $1.65 billion.
Garmin Ltd (GRMN) closed down more than -11% after forecasting full-year revenue of about $7.10 billion, below the consensus of $7.15 billion.
Smurfit WestRock Plc (SW) closed down more than -12% after reporting Q3 adjusted Ebitda of $1.30 billion, weaker than the consensus of $1.32 billion.
Verisk Analytics (VRSK) closed down more than -10% to lead losers in the Nasdaq 100 after forecasting full-year adjusted EPS of $6.80 to $7.00, the midpoint below the consensus of $7.00.
Hormel Foods (HRL) closed down more than -9% after cutting its Q4 adjusted EPS estimate to 8 cents to 9 cents from a prior guidance of 38 cents to 40 cents.
Boeing (BA) closed down more than -4% to lead losers in the Dow Jones Industrials after reporting a Q3 core share loss of -$7.47 a share, well below the consensus of a -$4.44 a share loss.
Mondelez International (MDLZ) closed down more than -4% after cutting its full-year adjusted EPS estimate to down -15% from a previous estimate of down -10%.
Earnings Reports(10/30/2025)
Altria Group Inc (MO), Amazon.com Inc (AMZN), Ameriprise Financial Inc (AMP), AMETEK Inc (AME), Apple Inc (AAPL), Aptiv PLC (APTV), Arthur J Gallagher & Co (AJG), Atlassian Corp (TEAM), Baxter International Inc (BAX), Biogen Inc (BIIB), Bristol-Myers Squibb Co (BMY), Builders FirstSource Inc (BLDR), Cardinal Health Inc (CAH), Cigna Group/The (CI), CMS Energy Corp (CMS), Coinbase Global Inc (COIN), Comcast Corp (CMCSA), Dexcom Inc (DXCM), DTE Energy Co (DTE), Edwards Lifesciences Corp (EW), Eli Lilly & Co (LLY), EMCOR Group Inc (EME), Erie Indemnity Co (ERIE), Estee Lauder Cos Inc/The (EL), First Solar Inc (FSLR), Fox Corp (FOXA), Gilead Sciences Inc (GILD), GoDaddy Inc (GDDY), Hershey Co/The (HSY), Howmet Aerospace Inc (HWM), Huntington Ingalls Industries (HII), Ingersoll Rand Inc (IR), Intercontinental Exchange Inc (ICE), International Paper Co (IP), Kellanova (K), Kimberly-Clark Corp (KMB), Kimco Realty Corp (KIM), L3Harris Technologies Inc (LHX), LKQ Corp (LKQ), Mastercard Inc (MA), Merck & Co Inc (MRK), Monolithic Power Systems Inc (MPWR), Motorola Solutions Inc (MSI), Quanta Services Inc (PWR), Republic Services Inc (RSG), ResMed Inc (RMD), S&P Global Inc (SPGI), Southern Co/The (SO), Strategy Inc (MSTR), Stryker Corp (SYK), Trane Technologies PLC (TT), VICI Properties Inc (VICI), Vulcan Materials Co (VMC), WEC Energy Group Inc (WEC), Western Digital Corp (WDC), Weyerhaeuser Co (WY), Willis Towers Watson PLC (WTW), Xcel Energy Inc (XEL).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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