This Week

We’re kicking off a busy week of earnings — and an expected Fed rate cut — on a strong note, with S&P futures up about +0.6% Sunday evening. The move comes on renewed optimism around U.S.–China trade talks, a quick turnaround from just a couple weeks ago when it looked like tensions were heating up again. Traders seemed to sense the shift early, with stocks finishing last week at new highs, and it looks like that optimism will carry into Monday’s open. As for the week ahead: plenty of big earnings on deck and, of course, the Fed. But first, a quick look at what happened over the weekend.

• U.S. and China officials reach consensus on rare earths, tariff pause for Trump and Xi to consider (CNBC)

  • Top Chinese and U.S. economic officials on Sunday hashed out the framework of a trade deal for U.S. President Donald Trump and Chinese President Xi Jinping to finalize that would pause steeper American tariffs and Chinese rare earths export controls and resume U.S. soybean sales to China, U.S. officials said. U.S. Treasury Secretary Scott Bessent said the talks on the sidelines of the ASEAN Summit in Kuala Lumpur had eliminated the threat of Trump’s 100% tariffs on Chinese imports starting November 1. Bessent said he expects China to delay implementation of its rare earth minerals and magnets licensing regime by a year while the policy is reconsidered. Chinese officials were more circumspect about the talks and offered no details about the outcome of the meetings.

• Trump Says He Will Raise Tariffs on Canada by 10% Over Ontario Ad (WSJ)

  • The U.S. will impose an additional 10% tariff on Canada, President Trump said on Saturday, a punitive measure in response to an ad campaign that he said misrepresented comments by former President Ronald Reagan. “Because of their serious misrepresentation of the facts, and hostile act, I am increasing the Tariff on Canada by 10% over and above what they are paying now,” Trump posted on his Truth Social platform on Saturday.

• The Bulls Are Back, in Our Exclusive Poll of Money Managers. Why They See Stocks Climbing Through 2026. (Barron’s)

  • There’s nothing like a roaring stock market to turn investment bears into bulls. Just ask respondents to Barron’s latest Big Money poll of professional investors, 47% of whom now say they are upbeat about the market’s prospects over the next 12 months. That compares with just 28% who called themselves bullish in the spring, the lowest reading since at least 1997.

• Bitcoin 'just doesn’t cut it anymore': Miners' pivot to AI sends stocks soaring (Yahoo Finance)

  • Bitcoin miners are using their computing power to service a thirsty AI boom, and investors are taking notice. Companies once focused solely on mining digital tokens are signing long-term contracts using their land, energy, and data centers for AI workloads.

• Market Fragility Tests Options Traders as Volatility Abates (Bloomberg)

  • The stock market isn’t particularly volatile. Still, it’s fragile.

    A spike and quick reversal in volatility gauges on fairly benign S&P 500 Index moves over the past two weeks has renewed discussion about market fragility, with long periods of calm being broken up by sudden oversized swings. The latest example came on Oct. 16, when the Cboe Volatility Index surged to a six-month high as the S&P 500 dropped just 0.6% on concern about loan losses at regional banks. The VIX move relative to that of the benchmark index was more extreme than during the vol spike of August 2024, the Volmageddon episode in February 2018 and the aftermath of the Lehman Brothers failure in 2008, according to UBS Group AG strategists.

• OpenAI’s Less-Flashy Rival Might Have a Better Business Model (WSJ)

  • OpenAI recently inked hundreds of billions of dollars of deals to build data centers filled with chips it hopes will further its AI dominance. But one of its rivals—the Amazon AMZN 1.41%increase; green up pointing triangle-backed developer Anthropic—has a clearer path to making a sustainable business out of AI. Anthropic and OpenAI do similar things: They develop advanced AI models upon which chatbots, image generators and a host of other AI tools are based.

Last week’s late week rally did a number on short duration volatility. With SPX options pricing in just a 1.4% for this week. That compares to 1.7% last week and 2.4% the week prior to that. That’s despite the fact that this week will see a Fed rate decision/statement/press conference, and a number of Mag7 earnings reports:

This Week’s Expected Moves:

• SPX/SPY: 1.4%

  • QQQ: 1.9%

  • IWM: 2.4%

  • TLT: 1.1%

  • USO: 3.8%

Oil’s been especially volatile over the past two weeks, and the options market suggests that’s not changing anytime soon — pricing in nearly a 4% expected move in USO.

Looking ahead to this week’s economic data, the government shutdown will likely delay both the GDP and PCE reports, since they come from the Commerce Department. The FOMC, however, is proceeding as usual — though they’re flying a bit blind without key data like PCE. A rate cut is being priced as a near certainty, but as always, the the comments that follow the decision could move markets.

Economic Calendar: 

• Wednesday

  • 10am - Pending Home Sales

  • 2pm - FOMC Rate Decision

  • 2:30pm - Powell Presser

• Thursday

  • 9:15am - ECB Rate Decision

  • 9:55am - Fed Bowman Speech

• Friday

  • 9:45am: Chicago PMI

  • 11:45am: Fed Hammack Speech

Earnings this week features a huge portion of the Mag7. Here are some of the other highlights as well:

Earnings (with expected moves):

• Monday

  • After-hours: BBBY 12%, WHR 6%

• Tuesday

  • Pre-market: SOFI 11%, PYPL 8%, UNH 6%, GLW 7%

  • After-hours: BKNG, ENPH, V

• Wednesday

  • Pre-market: BA 5%, VZ 3.5%, CAT 5%, ETSY 10%

  • After-hours: META 6.5%, MSFT 4.5%, GOOGL 6.3%, CMG 8%, NOW 7.9%, MELI 7.7%, SBUX 7.3%

• Thursday

  • Pre-market: LLY 5.6%, MRK 4.3%

  • After-hours: AMZN 6.3%, AAPL 3.8%, COIN 8.6%, RDDT 14%, WDC 10%, MSTR 6.3%, ROKU 11%

• Friday

  • Pre-market: XOM 2.8%, CVX 2.9%, ABBV 3.6%

One last note: This week’s earnings lineup packs a massive amount of market cap. If the individual stock reactions end up offsetting each other, we’ll likely see volatility drop sharply after this week’s earnings and the FOMC meeting have passed. But if sentiment moves in unison — whether bullish or bearish — across both the big earnings reports and the Fed decision, it could set the tone for equities’ next leg, and keep implied volatility, and actual market moves elevated, at least until NVDA reports.

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