Wall St scales fresh highs on tech earnings, US-China trade optimism
Earnings from five of the "Magnificent Seven" megacap companies, Microsoft, Apple, Alphabet, Amazon and Meta, later this week will test the market rally's endurance, which has largely depended on optimism around growth and capital expenditures related to artificial intelligence.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, US, Oct 27, 2025. (REUTERS/Brendan McDermid)
Wall Street's main indexes posted record closing highs for the second day in a row on Monday (Oct 27) as investors were hopeful about the prospects for a US-China trade deal and looked forward to a week packed with high-profile technology earnings and a widely expected US interest rate cut.
US President Donald Trump and his Chinese counterpart Xi Jinping are due to meet on Thursday to decide on a framework that could pause tougher US tariffs and China's rare-earth export curbs, easing market jitters around a trade war and sending Wall Street's "fear gauge" VIX down to a roughly one‑month low.
During weekend TV appearances, US Treasury Secretary Scott Bessent talked about agreements around China buying US soybeans and its rare-earth exports after two days of trade talks in Malaysia.
Along with the upcoming meeting, Bessent's comments boosted hopes for easing US-China tensions, said Scott Wren, senior global market strategist at Wells Fargo Investment Institute in St Louis, Missouri.
Earnings from five of the "Magnificent Seven" megacap companies, Microsoft, Apple, Alphabet, Amazon and Meta, later this week will test the market rally's endurance, which has largely depended on optimism around growth and capital expenditures related to artificial intelligence.
"With five of the Mag Seven reporting this week, what the market expects to hear is confirmation that all this AI CapEx is coming through, that the revenues and profits from AI are coming through," said Wren.
The Dow Jones Industrial Average rose 337.47 points, or 0.71 percent, to 47,544.59. The S&P 500 advanced 83.47 points, or 1.23 percent, to 6,875.16 for its first close above the 6,800 level. The Nasdaq Composite gained 432.59 points, or 1.86 percent, at 23,637.46.
Among the S&P 500's 11 major sectors, three rallied sharply. Communication services added 2.3 percent with Alphabet's 3.6 percent rally leading the way.
Technology ended up 2 percent at a fresh record close, along with the Philadelphia Semiconductor index, which added 2.7 percent.
The biggest advance in tech came from Qualcomm, which surged 11 percent after it unveiled two AI chips for data centers, with commercial availability starting next year.
AI chip leader Nvidia also rose 2.8 percent and provided the S&P 500's biggest boost.
Consumer discretionary .SPLRCD finished up 1.5 percent, led by Tesla which rallied 4.3 percent on optimism around the US-China talks.
But Christopher Brown, Synovus' vice president of investments in private wealth management, said Tesla's rally may be short-lived since the stock is still expensive "even with the best negotiated US-China trade deal."
The lagging sectors were consumer staples .SPLRCS, off 0.27 percent and materials .SPLRCM, which finished down 0.25 percent.
Shares of US-listed rare earth miners slumped as the prospects for a US-China agreement eased fears of supply disruptions that had boosted the sector this year. Shares of Critical Metals ended down 13.7 percent, while NioCorp Developments dropped 11.5 percent and Ramaco Resources fell 2.6 percent.
US-listed shares of Chinese companies including Alibaba Group Holding, JD.com, PDD Holdings rallied between 2.7 percent and 3 percent while Baidu climbed 4.8 percent.
FED RATE CUT FULLY PRICED IN
Cooler inflation data last week all but sealed bets for a 25-basis-point rate cut by the Federal Reserve on Wednesday, and investors will closely monitor Chair Jerome Powell's comments for clues on a December cut, as the US government shutdown holds up key data releases.
Among individual stocks, Keurig Dr Pepper climbed 7.6 percent after lifting its annual sales forecast and raising about US$7 billion to finance its purchase of Dutch coffee giant JDE Peet's. Lululemon shares rose 1.8 percent after the sportswear maker announced a partnership with the National Football League.
Janus Henderson shares rallied 11.3 percent after it confirmed an acquisition proposal from Trian and General Catalyst.
US-listed shares of Argentine companies jumped after President Javier Milei's election victory. YPF gained 23.8 percent while Grupo Supervielle surged 48 percent, and Banco Macro rose 37.6 percent. Grupo Financiero Galicia rose 38.7 percent while Banco BBVA Argentina advanced around 40.8 percent.
Advancing issues outnumbered decliners by a 1.74-to-1 ratio on the NYSE, where there were 659 new highs and 69 new lows.
On the Nasdaq, 2,593 stocks rose and 2,145 fell as advancing issues outnumbered decliners by a 1.21-to-1 ratio. The S&P 500 posted 37 new 52-week highs and three new lows while the Nasdaq Composite recorded 132 new highs and 57 new lows.
On US exchanges, 19.76 billion shares changed hands, compared with the 20.85 billion moving average for the last 20 sessions.
