Wall Street indexes recover as trade tensions ease

U.S. stock indexes rose, supported by a rebound in major tech stocks, with trade tensions easing ahead of the release of inflation data, while stock traders shrugged off concerns about the impact of rising oil prices on rates. Bonds fell. The S&P 500 index approached its record levels after the White House announced that US President Donald Trump will meet his Chinese counterpart Xi Jinping on October 30. Tesla pared its losses following earnings results, which led the gains of major companies, while shares of energy companies rose along with the rise in oil prices, after the United States announced an end to the imposition of the largest sanctions on companies. in Ukraine. The rise in stocks came amid hopes that the world’s two largest economies will move towards de-escalating the trade war. At the same time, the Trump administration is considering providing incentives for quantum computing technologies as part of its efforts to confront China, which has stimulated a boom in this sector. Investors’ optimism despite recent volatility Despite the recent increase in volatility, declines have remained limited as individual investors view these periods as opportunities to increase risk in light of the strength of large US companies. Nationwide’s Mark Hackett said: “Valuations remain the strongest argument for pessimists, but investors’ insistence on buying dips has made even the most pessimistic reconsider their expectations.” Even the rise in oil prices did not deter Wall Street from a buying spree. As financial markets brace for the possibility of a rate cut by the Federal Reserve next week, investors are likely to ignore any signs of continued inflation in the CPI report expected on Friday. The S&P 500 index closed near the level of 6,740 points, and the Nasdaq 100 rose by about 1%. Tesla shares rose more than 2%. In extended trading, Intel offered upbeat revenue forecasts, while Ford Motor Company expected its profit to drop by up to $2 billion due to a fire at one of its major suppliers. West Texas Intermediate crude jumped about 5.5%. US 10-year bond yields rose 6 basis points to 4%. Gold’s losses stopped, while the dollar fluctuated. Binance Coin jumped after platform co-founder Changpeng Zhao received a pardon from Trump. Delayed release of US inflation data After being delayed by the US government shutdown, the Bureau of Labor Statistics will release September CPI data on Friday, data originally scheduled for October 15, and will provide Federal Reserve officials with a key indicator of the path of inflation ahead of their meeting next week. Economists polled by Bloomberg expect the core price index, which excludes food and fuel, to rise 0.3% for the third straight month, with the annual rate remaining at 3.1%, as high tariffs continue to gradually affect consumers. Expectations of another rate cut despite inflation remaining high Despite inflation remaining above the target set by the Federal Reserve, the central bank is expected to announce a second rate cut this year, given the fragility of the labor market. “Friday’s report is particularly important because it is one of the few economic data we will get under the government shutdown,” said Emily Bowersock Hill, founding partner at Bowersock Capital Partners. But she added: “As the Fed focuses more on the labor market, we do not expect the inflation report to have much influence on next week’s decision. We will most likely see two additional cuts this year in October and December.” Market bets and investor expectations: The trading department at JP Morgan Chase believes there is a 65% probability that the S&P 500 index will continue to rise after the release of the data, despite analysts expecting a high inflation reading. The team led by Andrew Tyler said the expected scenarios for how stocks will react to inflation data will be “less volatile than usual” as investors’ expectations of a new rate cut could offset any inflation-related anxiety. “We agree with the market’s view, and believe it will take extraordinary risks to prompt the Fed to stop easing,” Tyler wrote in a note to clients. Principal Asset Management’s Seema Shah said that headline inflation had previously been forecast to rise to around 3.5% by the end of the year, but the flow of inflation has so far been more moderate than expected, likely due to a combination of shrinking margins, pre-positioning of inventory and shifting trade routes. She added: “While these factors helped soften the initial impact, they are temporary in nature. As inventories decline, trade routes narrow and margins continue to shrink, companies may be forced to pass on higher costs to consumers. Upside risks therefore remain, and if price pressure spreads to the services sector, it could signal a broader and more sustainable inflationary trend.” Her company’s estimates showed that the rates would lead to a limited, one-off inflationary shock, with core inflation remaining close to its current levels, before falling slightly at the end of 2026, but it indicated that the risk of a continued inflationary wave could not be ruled out, prompting the Fed to take a more cautious approach to cutting interest rates. Investors’ outlook and continued market optimism. A survey conducted by 22V Research showed that 45% of investors expect the market’s reaction to inflation data to be positive (an attitude towards risk), while 26% believe it will be negative, and 29% expect a limited or mixed impact. This is the first time since July that the positive forecast is better. The poll also showed that 61% of investors believe that core inflation is on a path that is “suitable for the Fed,” a percentage that increased from last month. Ulrike Hofmann-Burchard of UBS Global Wealth Management believes that expectations of monetary easing, sustainable profit growth and spending on artificial intelligence support the view that the bull market in equities still has room for further upside. She said: “While it is important to maintain adequate exposure to US stocks, investors should also diversify their portfolios. Any setback in US-China relations or concerns about the sustainability of the AI-driven bull run could lead to bouts of volatility. In this landscape, we see attractive opportunities in some Asian equity markets, high-quality bonds and gold.”