The S&P 500 Index ($SPX) (SPY) on Monday closed up +1.56%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +1.29%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +2.18%. December E-mini S&P futures (ESZ25) rose +1.47%, and December E-mini Nasdaq futures (NQZ25) rose +2.12%.
Stock indexes rose sharply on Monday as they recovered some of their losses from last Friday's plunge. Asset markets rebounded on Monday after the Trump administration softened its rhetoric toward China. Chipmakers and AI infrastructure stocks also rallied on Monday, with Broadcom jumping more than 9% after OpenAI signed a multi-year agreement with the company to collaborate on custom chips and networking equipment, which could add 10 gigawatts' worth of AI data center capacity.
There was no trading in cash Treasuries on Monday due to the Columbus Day holiday. The price of gold surged by more than 3% on Monday to a new all-time high, driven by central bank buying, expectations for additional Fed rate cuts, and safe-haven demand stemming from the US government shutdown, threats to the Fed's independence, global trade tensions, and geopolitical risks.
Dovish comments on Monday from Philadelphia Fed President Anna Paulson were supportive for stocks, as she said she favors two more quarter-point interest rate cuts this year, given that she doesn't see conditions that would turn tariff-induced price increases into sustained inflation.
The Trump administration signaled openness on Sunday to a trade deal with China in an attempt to ease trade tensions. Stocks plunged last Friday after President Trump threatened 100% tariffs on Chinese goods and restrictions on US software exports, effective November 1, in retaliation for China's sweeping new curbs on exports of rare-earth materials and related technology.
Trade news from China was better than expected, a positive sign for global economic growth and a bullish factor for the stock market. China Sep exports rose +8.3% y/y, stronger than expectations of +6.6% y/y and the biggest increase in six months. Also, Sep imports rose +6.4% y/y, stronger than expectations of +1.8% y/y and the largest increase in 17 months.
Most stock indexes rallied to record highs last week on optimism that growth in the AI sector and spending on artificial intelligence will translate into corporate profits. Stocks are also underpinned by hopes that a resilient US economy and additional Fed easing will continue to support the economy.
The shutdown of the US government continues, weighing on market sentiment and delaying key economic reports. The government shutdown means delays in the release of government reports, including the last two weeks of weekly initial unemployment claims, the Aug US trade report, and the Sep nonfarm payrolls report. Last Friday, the Bureau of Labor Statistics (BLS) said that it will release the September consumer price report on October 24 if the government shutdown continues into Wednesday, when the Sep CPI report is scheduled for release. The White House has warned that if the government shutdown lingered, it would trigger widespread dismissals of employees in government programs that don't align with President Trump's priorities. Bloomberg Economics estimates that 640,000 federal workers will be furloughed during the shutdown, which would expand jobless claims and push the unemployment rate up to 4.7%.
The markets this week will focus on trade or tariff news and any attempts to reopen the government. On Tuesday, Fed Chair Powell delivers the keynote address at the NABE Annual Meeting. Also on Tuesday, major banks, including JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo & Co., will begin releasing their earnings results as the Q3 earnings season begins.
Rising corporate earnings expectations are a bullish backdrop for stocks. According to Bloomberg Intelligence, more than 22% of companies in the S&P 500 provided guidance for their Q3 earnings results that are expected to beat analysts' expectations, the highest in a year. However, Q3 profits are expected to have risen by +7.2%, the smallest increase in two years. Also, Q3 sales growth is projected to slow to +5.9% from 6.4% in Q2.
The markets are pricing in a 98% chance of a -25 bp rate cut at the next FOMC meeting on Oct 28-29.
Overseas stock markets on Monday settled mixed. The Euro Stoxx 50 closed up +0.67%. China's Shanghai Composite fell to a 2.5-week low and closed down -0.19%. Japan's Nikkei Stock 225 did not trade as markets in Japan are closed for the Health-Sports Day holiday.
Interest Rates
December 10-year T-notes (ZNZ5) on Monday closed up +0.5 of a tick. Cash 10-year T-notes did not trade on Monday, with the Treasury market closed for the Columbus Day holiday. Dec -T-notes were little changed on Monday and found support on dovish comments from Philadelphia Fed President Anna Paulson, who said she favors two more quarter-point interest rate cuts this year. T-notes also have support amid concerns about the ongoing US government shutdown, which could lead to additional job losses, reduced consumer spending, and a weakened US economy, potentially allowing the Fed to continue cutting interest rates. Gains in T-notes were limited after stocks rebounded sharply, which curbed safe-haven demand for government debt securities.
European government bond yields moved lower on Monday. The 10-year German bund yield dropped to a 2-month low of 2.622% and finished down -0.8 bp at 2.636%. The 10-year UK gilt yield fell to a 3-week low of 4.644% and finished down -1.7 bp to 4.658%.
The German Sep wholesale price index rose +1.2% y/y, the fastest pace in six months.
Swaps are discounting a 2% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30.
US Stock Movers
Chipmakers rallied sharply higher on Monday, boosting the overall market. Broadcom (AVGO) closed more than +9% after OpenAI signed a multi-year agreement with the company to collaborate on custom chips and networking equipment. Also, ARM Holdings Plc (ARM) closed up more than +11% to lead gainers in the Nasdaq 100, and ON Semiconductor (ON) closed up more than +9%. In addition, Micron Technology (MU) and Microchip Technology (MCHP) closed up more than +6%, and ASML Holding NV (ASML), Qualcomm (QCOM), and NXP Semiconductors NV (NXPI) closed up more than +5%. Finally, Applied Materials (AMAT), ASML Holding NV (ASML), Lam Research (LRCX), KLA Corp (KLAC), Analog Devices (ADI), GlobalFoundries (GFS), and Marvell Technology (MRVL) closed up more than +4%.
The Magnificent Seven technology stocks rose on Monday as they recovered some of the losses from last Friday's plunge. Tesla (TSLA) closed up more than +5% and Alphabet (GOOGL) closed up more than +3%. Also, Nvidia (NVDA) closed up more than +2%, and Amazon.com (AMZN) and Meta Platforms (META) closed up more than +1%. In addition, Apple (AAPL) closed up +0.97% and Microsoft (MSFT) closed up +0.60%.
Rare earth stocks surged on Monday as fresh tensions between China and the US over China's exports of the minerals are boosting alternative suppliers. As a result, Critical Metals (CRML) closed up more than +53%, MP Materials (MP) closed up more than +21%, and Ramaco Resources (METC) closed up more than +11%.
Mining stocks moved higher on Monday, as the price of gold rose more than +3% to an all-time high and silver prices jumped more than +6% to a record high. As a result, Coeur Mining (CDE) closed up more than +8%. Also, Newmont (NEM closed up more than +5%, Freeport-McMoRan (FCX) closed up more than +4%, and Anglogold Ashanti Plc (AU) closed up more than +3%.
Estee Lauder (EL) closed up more than +5% after Goldman Sachs upgraded the stock to buy from neutral with a price target of $115.
Ciena Corp (CIEN) closed up more than +5% after BNP Paribas Exane upgraded the stock to outperform from neutral with a price target of $185.
Warner Bros Discovery (WBD) closed up more than +4% after rejecting Paramount Skydance Corp's initial takeover offer as too low.
Stubhub Holdings (STUB) closed up more than +3% after Wedbush initiated coverage on the stock with a recommendation of outperform and a price target of $25.
Tvardi Therapeutics (TVRD) closed down sharply by more than -83% after a Phase 2 trial of its TI-101 to treat idiopathic pulmonary fibrosis failed to meet its goals.
Fastenal (FAST) closed down more than -7% to lead losers in the S&P 500 and Nasdaq 100 after reporting Q3 EPS of 29 cents, below the consensus of 30 cents.
US casino stocks with exposure to Macau are sliding today after Macau industry data showed gaming revenue for the Golden Week holiday was down -5% y/y. As a result, Las Vegas Sands (LVS) and Wynn Resorts Ltd (WYNN) closed down more than -6%.
Defensive food producers and beverage makers declined on Monday, following a broader market rebound. J M Smucker (SJM) and Monster Beverage (MNST) closed down more than -3%. Also, General Mills (GIS) and Conagra Brands (CAG) closed down more than -2%. In addition, Hershey (HSY), the Campbell's Company (CPB), and McCormick & Co. (MKC) closed down more than -1%.
Baldwin Insurance Group (BWIN) closed down more than -5% after BMO Capital Markets downgraded the stock to market perform from outperform.
PayPal Holdings (PYPL) closed down more than -1% after Goldman Sachs downgraded the stock to sell form neutral with a price target of $70.
Earnings Reports(10/14/2025)
Albertsons Cos Inc (ACI), Blackrock Inc (BLK), Citigroup Inc (C), Domino's Pizza Inc (DPZ), Goldman Sachs Group Inc/The (GS), Johnson & Johnson (JNJ), JPMorgan Chase & Co (JPM), Wells Fargo & Co (WFC).
