US and China Trade Agreement: Market Effects

US Markets Show Mixed Signals

On Thursday, Wall Street exhibited a mixed view as it observed the trade truce between Presidents Donald Trump and Xi Jinping. This situation reduced the likelihood of another interest rate cut, while Big Tech earnings shaped expectations for the next quarter's results. Although the Dow Jones Index (%^DJI) initially experienced a decline, it gained 0.6%. Meanwhile, the broader S&P 500 Index (%^GSPC) closed down 0.2%, and the technology-heavy Nasdaq Composite (%^IXIC) showed a drop of 0.9%.

Investors are eagerly awaiting quarterly results from technology giants such as Apple (AAPL) and Amazon (AMZN). The day before, the earnings results of members of the “Magnificent Seven,” including Alphabet (GOOG), Meta (META), and Microsoft (MSFT), presented a complex picture. Alphabet shares rose by more than 5% following stronger-than-expected quarterly results. However, Meta shares fell by 12%, while Microsoft experienced a 2% pullback.

Federal Reserve Chairman Jerome Powell emphasized that there is no definitive conclusion regarding an interest rate cut in December. These statements also signal a division among policymakers.

The impact of the meeting between Trump and Xi painted a complex picture. The US reduced tariffs on fentanyl from 20% to 10%, while Xi pledged to postpone restrictions on rare earth supplies for one year. Reports indicate that China will resume purchases of US soybeans.

On Thursday morning, the performance of rare earth stocks exhibited a mixed trend. MP Materials (MP), the only company with a commercially scaled rare earth mine in the US, initially lost over 1% but rebounded with an increase of 0.8%. USA Rare Earth (USAR) opened down 2.8% and NioCorp Developments (NB) down 2.5%, but later gained over 4% respectively.

After the meeting, Chipotle (CMG) shares quickly lost value after announcing a further downward revision of its year-end revenue forecasts. Other significant results highlighted by investors include companies such as Eli Lilly (LLY), Mastercard (MA), and Shell PLC (SHEL).

Additionally, it was reported that Meta (META) shares lost 10% in value. Although the company recorded higher-than-expected revenues, its quarterly earnings per share fell below estimates due to a one-time tax charge. Meta aims to target investments of $70 to $72 billion for 2025, compared to its previous target range of $66 to $72 billion.

Finally, it was noted that the shares of Metsera (MTSR) increased by over 20% in pre-market trading following a $6.5 billion offer from Novo Nordisk (NVO).