US Stock Market in Decline: Trump and Xi Affected Trade

US Stock Market in Decline

On Thursday, stocks on Wall Street fell as the trade truce brokered by Presidents Trump and Xi between the US and China reduced the likelihood of another interest rate cut. This development came after the "Fabulous Seven" members reported mixed earnings results.

Dow Jones Industrial Average (%DJI) lost 0.2%, while the broader S&P 500 (%GSPC) fell more than 0.5%. The technology-focused Nasdaq Composite Index (%IXIC) declined by more than 0.9%, leading the downward movement. During this period, Meta (META) shares experienced a significant drop.

Stocks lost momentum following Federal Reserve Chairman Jerome Powell's emphasis that a rate cut in December is 'not inevitable – too far off'. Powell's remarks came after a quarter-point reduction in interest rates and highlighted a division among policymakers.

While the nighttime meeting between Trump and Xi provided a year-long trade truce, it failed to deliver the expected impact on the market. In exchange for the US halving tariffs related to fentanyl, China agreed to suspend restrictions on rare earth supply for 12 months. Additionally, it was stated that China would resume purchases of American soybeans.

Investors are now waiting for quarterly results from tech giants like Apple (AAPL) and Amazon (AMZN) after the earnings reports from the "Fabulous Seven" members including Alphabet (GOOG), Meta, and Microsoft

Alphabet shares rose by more than 7% after the company reported stronger-than-expected quarterly results. However, shares of Meta and Microsoft fell as investors assessed the companies' outlooks.

Meta (META) shares declined 10% before the market opened on Thursday due to high operating costs and investments in artificial intelligence. Although the company reported revenue above estimates, earnings per share for the third quarter fell short of expectations.

Meta CFO Susan Li announced that they are targeting investments of $70 billion to $72 billion for 2025, which is higher than previous estimates.

On the other hand, shares of Metsera (MTSR) surged by more than 20% after receiving a $6.5 billion acquisition offer from Novo Nordisk (NVO, NOVO-B.CO). Novo's stock presented an offer of $56.50 per share to compete with Pfizer's (PFE) agreement concerning Metsera. Additionally, it stated the purchase price could increase by another $21.25 if certain milestones are achieved.

Eli Lilly (LLY) shares rose by 5% before the market opened after exceeding third-quarter earnings estimates due to strong sales of diabetes medications. Google's parent company Alphabet (GOOG, GOOGL) shares saw a 7% increase following quarterly results linked to AI deals.

Among the economic data, initial jobless claims and third-quarter personal consumption and gross domestic product (GDP) data for the week ending October 25 are included.