Banks set to open earnings floodgate with Powell on tap

By Alden Bentley

NEW YORK (Reuters) -TRADING DAY

Making sense of the forces driving global markets

Jamie McGeever is enjoying some well-deserved time off, but the Reuters markets team will still keep you up to date on what's happening in markets. The biggest U.S. banks will report third-quarter results on Tuesday, at the vanguard of the S&P 500 earnings parade over the next few weeks. I'd love to hear from you, so please reach out to me with comments at [email protected]

Today's Key Reads

* Trump on track to meet Xi in South Korea, Bessent says * Wall Street rallies on Trump China comments; Broadcomsurges * How the United States is eating Trump's tariffs * Gold breaks $4,100 to hit high on trade jitters,rate-cut optimism * JPMorgan to invest up to $10 billion in US nationalsecurity as part of $1.5 trillion pledge * Oil rises as US, China try to de-escalate trade tensions

Today's Key Market Moves

STOCKS: Major U.S. indexes rebounded sharply, led by chipmakers like Broadcom and AI-related tech stocks, after President Donald Trump struck a more conciliatory tone that eased worries about a trade war with China. The S&P 500 was up 1.6% in late trade. The Nasdaq was up 2.2%.

SHARES/SECTORS: Information Technology is the top-performing S&P 500 sector on the day, followed closely by Consumer Discretionary. 

FX: The U.S. dollar steadied after Trump dialed back trade tensions with China, while political developments in France and Japan undermined the euro and the yen.

BONDS: Bond markets were closed for Columbus Day.

COMMODITIES: Oil prices recovered from Friday's five-month lows as talks between Trump and Chinese President Xi Jinping in late October appeared to be back on. The renewed U.S.-China trade spat vaulted gold above $4,100 an ounce for the first time. 

CRYPTO: According to market players on Monday, Friday's late wipeout in cryptocurrencies was the largest liquidation ever, amounting to over $19 billion of leveraged positions. On Monday, bitcoin was down 0.60% to $114,375.22 while ethereum declined 0.54% to $4,120.42.

Today's Key Talking Points

Trump chills out on China

Just as suddenly as Trump's familiar-sounding threat to impose 100% tariffs on China for curbing exports of rare earths sent Wall Street into freefall on Friday, de-escalation on Monday invited a rush of renewed stock buying that looked to put record territory back in play.

Treasury Secretary Scott Bessent told Fox Business Network that the president was back on track to meet Chinese President Xi Jinping in South Korea later this month as originally planned.

While Monday was a normal day for stock markets, bond traders were off for Columbus Day and Indigenous Peoples' Day. The federal holiday came as many government workers are already furloughed while the shutdown drags on, and some could be out of a job when Congress ends it and agrees on a spending bill.

There is no sign that Democrats and Republicans will find common ground this week, meaning indicators like producer prices, retail sales and weekly jobless claims will not be released and join the list of important, but probably stale, data like September payrolls that will someday be released in a flood.

But Tuesday promises to be busy nevertheless with JPMorgan Chase JPM, Goldman Sachs GS, Citigroup C and Wells Fargo WFC releasing earnings to kick off the third-quarter reporting season. Also Federal Reserve Chairman Jerome Powell speaks in Philadelphia on economic conditions and monetary policy, with data-starved traders even more keen to get a read on how the Fed will make a decision to ease again, or not, when it is missing weeks of information on the economy.    

Gold: The Fear Trade

Gold is perhaps the biggest beneficiary of the upwelling of recriminations between Trump and Xi. It rose above $4,100 an ounce for the first time on Monday, even after they turned the heat down, with traders betting that more Fed easing by year-end will make zero-yield bullion more appealing. With central banks buying and investors availing themselves of ETFs, there appear to be enough positives to keep the rally going. Silver also hit a record above $52 an ounce. 

What could move markets tomorrow?

* JPMorgan, Goldman Sachs, Citigroup, Wells Fargo reportearnings * Fed Chair Jerome Powell speaks on monetary policy andeconomy

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

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