December S&P 500 E-Mini futures (ESZ25) are trending down -0.02% this morning, paring earlier losses after U.S. President Donald Trump moved to ease concerns over a trade war with China.
President Trump told reporters on Friday that current tariffs on China were “not sustainable” and confirmed plans to meet with Chinese leader Xi Jinping in South Korea in the coming weeks.
S&P 500 futures initially dropped as much as 1.5% amid worries about the health of regional U.S. banks. Zions Bancorp and Western Alliance Bancorp said on Thursday that they were victims of suspected fraud involving loans linked to troubled property funds. Analysts said they believe these issues are likely isolated events, but investors remain especially sensitive to signs of stress in the sector following the 2023 collapse of Silicon Valley Bank. This adds to a growing list of investor concerns, including the U.S. government shutdown, fears of an AI bubble, and escalating U.S.-China trade tensions.
In yesterday’s trading session, Wall Street’s major indices closed lower. Zions Bancorp (ZION) sank over -13% after disclosing a $50 million charge-off tied to a loan issued by its wholly owned subsidiary, California Bank & Trust, in San Diego. Also, Western Alliance Bancorp (WAL) plunged more than -10% after the lender said it filed a lawsuit in August against one of its borrowers, alleging fraud. In addition, Hewlett Packard Enterprise (HPE) slumped over -10% after the server and cloud company provided disappointing FY26 guidance. On the bullish side, J.B. Hunt Transport Services (JBHT) soared more than +22% and was the top percentage gainer on the S&P 500 after the logistics company posted better-than-expected Q3 results.
Economic data released on Thursday showed that the U.S. Philly Fed manufacturing index fell to a 6-month low of -12.8 in October, weaker than expectations of 8.6.
Fed Governor Christopher Waller said on Thursday that policymakers can continue lowering interest rates in quarter-point steps to bolster the weakening labor market. “You don’t want to make a mistake, so the way to avoid that is to go cautiously or carefully and do 25, wait and see what happens, and then you can get a better idea of what to do,” Waller said. At the same time, Fed Governor Stephen Miran said he would support a half-percentage-point rate cut this month and reiterated that trade tensions heighten economic uncertainty and amplify downside risks to growth.
Richmond Fed President Tom Barkin said he remains “sanguine” about the outlook for both employment and inflation. “The ground may look shaky today, but I just think there are good reasons to think there are countervailing forces that will limit the downside,” Barkin said.
U.S. rate futures have priced in a 100% chance of a 25 basis point rate cut at the October FOMC meeting.
Meanwhile, the U.S. government shutdown continues, with no serious negotiations taking place. In light of the government shutdown, the publication of September industrial production data, originally set for today, will be delayed. Although the data is compiled by the Fed, the central bank said it would delay the release, as it relies on key inputs from other federal agencies affected by the shutdown, such as the Census Bureau.
Today, investors will focus on a speech from St. Louis Fed President Alberto Musalem.
On the earnings front, notable companies like American Express (AXP), Truist Financial (TFC), SLB N.V. (SLB), and State Street (STT) are slated to release their quarterly results today. According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +7.2% increase in quarterly earnings for Q3 compared to the previous year, marking the smallest rise in two years.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.956%, down -0.48%.
The Euro Stoxx 50 Index is down -1.31% this morning, tracking a global equity sell-off amid concerns around U.S. regional lenders. Bank and other financial stocks tumbled on Friday as loan troubles at a couple of U.S. regional lenders weighed on sentiment and fueled worries about the broader credit market. Also, defense stocks slumped after U.S. President Donald Trump said on Thursday that he and Russian President Vladimir Putin would hold a second summit on Ukraine in Budapest. Despite Friday’s sell-off, the benchmark index is on track to end the week higher. Final data from Eurostat confirmed on Friday that the Eurozone’s annual inflation rate rose to 2.2% in September from 2.0% in August. Meanwhile, France’s political outlook showed signs of stabilizing after Prime Minister Sebastien Lecornu survived two no-confidence votes on Thursday. In other news, strategists at Citigroup and Societe Generale warned on Friday that European equities may find it difficult to achieve further material gains this year as risks such as U.S.-China trade tensions hurt sentiment. In corporate news, Novo Nordisk A/S (NOVOB.C.DX) slid over -6% after President Trump said on Thursday that the price of the company’s top-selling weight-loss drug would be lowered. At the same time, EssilorLuxottica (EL.FP) surged more than +11% after the eyewear giant posted record Q3 sales.
Eurozone’s CPI and Eurozone’s Core CPI data were released today.
Eurozone’s September CPI rose +0.1% m/m and +2.2% y/y, in line with expectations.
Eurozone’s September Core CPI rose +0.1% m/m and +2.4% y/y, compared to expectations of +0.1% m/m and +2.3% y/y.
Asian stock markets today closed in the red. China’s Shanghai Composite Index (SHCOMP) closed down -1.95%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.44%.
China’s Shanghai Composite Index closed sharply lower today as trade tensions with the U.S. continued to weigh on sentiment. Chinese equities also tracked losses in regional markets following Wall Street’s overnight slump, as loan losses at two U.S. regional banks fueled concerns about broader credit market stress. Technology stocks led the declines on Friday. The benchmark index posted its largest weekly drop since early April. UBS analysts said in a note, “Investor sentiment has largely shifted as the market turns volatile, with most in wait-and-see mode amid political ups and downs.” A U.S. State Department spokesperson said on Friday that China’s sanctions this week on U.S. affiliates of shipbuilder Hanwha Ocean were intended to undermine South Korea-U.S. cooperation and “to coerce” Washington’s Asian ally. Meanwhile, Reuters reported on Friday that Micron plans to stop shipments of server chips to data centers in China after failing to recover from a 2023 government ban on its products used in key Chinese infrastructure. China on Thursday accused the U.S. of fueling panic over its rare earth controls and said Treasury Secretary Scott Bessent had made “grossly distorted” comments about a senior Chinese trade negotiator, rejecting Washington’s call to roll back the curbs. In other news, a senior International Monetary Fund official said on Thursday that China has room to increase fiscal stimulus but should redirect spending from industrial policy toward measures that stimulate consumption. Investor focus now shifts to China’s third-quarter GDP and other activity indicators due Monday, as well as a high-stakes Communist Party gathering that will lay out the nation’s economic, political, and social priorities as well as its development plans for the next five years.
Japan’s Nikkei 225 Stock Index closed lower today, tracking overnight losses on Wall Street. Financial stocks led the declines on Friday. Sentiment weakened after two U.S. regional banks disclosed substantial loan issues, sparking concerns about broader credit stress in the U.S. economy. Japanese equities were also pressured by a stronger yen. The benchmark index notched a weekly loss. Meanwhile, Bank of Japan Governor Kazuo Ueda signaled on Thursday that the central bank would proceed with policy normalization if confidence in meeting its economic outlook improves, leaving the door open for a near-term rate hike. Ueda noted that the bank will closely examine a range of data, including insights gathered during his stay in Washington, before deciding whether to raise interest rates in October. The IMF on Friday lifted its forecast for Japan’s economic growth this year to 1.1%, citing a robust rebound in domestic demand. On the political front, Japan’s ruling Liberal Democratic Party (LDP) has a 50-50 chance of forming a new coalition with opposition party Ishin, the leader of the smaller party said on Friday, as crucial talks continue ahead of next week’s parliamentary vote to choose the nation’s next prime minister. If the Japan Innovation Party backs LDP leader Sanae Takaichi, her victory in the vote is virtually assured. Foreign investors bought a net 1.89 trillion yen ($12.59 billion) worth of Japanese stocks in the week ended October 11th, fueled by expectations that LDP leader and fiscal dove Takaichi would become Japan’s next prime minister, according to data from the Ministry of Finance. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +15.47% to 35.53.
Pre-Market U.S. Stock Movers
Regional bank stocks extended their slide in pre-market trading. Citizens Financial Group (CFG) is down over -3% and Western Alliance Bancorp (WAL) is down more than -2%. Shares of big U.S. banks also dropped in pre-market trading, with Bank of America (BAC) and JPMorgan Chase (JPM) sliding over -1%.
The Magnificent Seven stocks dropped in pre-market trading amid risk-off sentiment, with Nvidia (NVDA) and Tesla (TSLA) falling more than -2%.
Chip stocks retreated in pre-market trading, with Intel (INTC) sliding over -3% and Advanced Micro Devices (AMD) falling more than -2%.
AST SpaceMobile (ASTS) slumped about -5% in pre-market trading after Barclays downgraded the stock to Underweight from Overweight with a price target of $60.
CSX Corp. (CSX) rose over +2% in pre-market trading after the railroad company posted better-than-expected Q3 results.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday- October 17th
American Express (AXP), Truist Financial Corp (TFC), SLB NV (SLB), State Street (STT), Fifth Third (FITB), Huntington Bancshares (HBAN), Regions Financial (RF), Ally Financial Inc (ALLY), Comerica (CMA), Webster Financial (WBS), Autoliv (ALV).
