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Stock futures jumped on Monday after U.S. and China officials cooled tensions over the weekend, laying the groundwork for President Donald Trump and China President Xi Jinping to clinch a trade deal this week.
Dow Jones Industrial Average futures added 261 points, or 0.6%. S&P 500 futures climbed 0.8% and Nasdaq 100 futures were up 1.2% with chip stocks like Nvidia leading the way in early trading.
“I think we have a very successful framework for the leaders to discuss on Thursday,” said Treasury Secretary Scott Bessent from the ASEAN Summit in Kuala Lumpur.
“Details are still limited, and nothing will be finalized until the Trump-Xi meeting, but a renewed truce now seems near-certain, with China likely fully delaying their rare earth export controls for a year—better than the alternative of an agreement to grant licenses,” said Tobin Marcus of Wolf Research in a note. “This overall better-than-expected outcome should be bullish for markets this week, assuming the Trump-Xi meeting goes well.”
Investors expect the Fed to slash rates at its meeting on Oct. 29, particularly after the Bureau of Labor Statistics released cooler-than-expected inflation data last week. Slightly more than 96% of investors expect a deep rate cut to 375 to 400 basis points, while about 3% are betting on a reduction to 400 to 425 basis points, according to the CME FedWatch Tool.
Big Tech companies’ upcoming earnings reports are also on tap. Several “Magnificent 7” stocks, including Alphabet, Amazon, Apple, Meta Platforms and Microsoft, will release their third-quarter results this week. And if earlier Q3 reports are any indication, the companies could post stronger-than-expected financial results.
U.S. President Donald Trump and China President Xi Jinping are scheduled to meet in South Korea on Thursday in an attempt to ease trade tensions, an event that could offer significant clarity and reassurance to investors.
U.S. Treasury Secretary Scott Bessent recently indicated that talks between the leaders have been “constructive, far-reaching, in-depth,” which could move the needle on negotiations.
A trade deal between the U.S. and China would be a boon for Big Tech stocks, contributing to a broader market bull run, according to Disruptive Technology analyst Dan Ives.
“It appears a much broader trade framework/deal could be on the table this week between US and China which would be a huge groundbreaking moment for the tech sector and markets,” Ives said Sunday in a note to clients.
Stocks are coming off a bullish week, with all three major indices hitting record highs last Friday. The Dow Jones Industrial Average added roughly 1%, or 472.51 points, to 47,207.12 — its first-ever close above the 47,000 mark. The S&P 500 ticked up 0.79% to 6,791.69, while the Nasdaq Composite rose 1.15% to 23,204.87.
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