Stocks Climb After Volatile Session Amid Trade Tensions, Strong Bank Earnings

Markets endured another choppy session Wednesday, with equities swinging on shifting headlines around U.S.-China trade tensions before rebounding on the back of upbeat financial earnings and AI optimism. The S&P 500 and Nasdaq finished higher, while the Dow closed slightly in the red. Investors remain sensitive to geopolitical developments, but solid Q3 bank results and strong AI-related tailwinds helped restore confidence. Meanwhile, gold continued its ascent, hitting a fresh record, and bond yields held relatively steady.

Key Headlines & Market Movers

• Trade Tensions Stir Volatility, But Earnings Take Over: Stocks reversed early gains midday after renewed concerns over trade flare-ups between the U.S. and China. President Trump’s tariff threats and Beijing’s push to curb rare earth exports unsettled markets briefly. However, Treasury Secretary Bessent’s comments about a possible tariff pause and a prospective Trump-Xi meeting helped ease tensions. By session’s end, earnings optimism reclaimed the spotlight, pushing major indexes back into positive territory.

Big Bank Earnings Impress: Morgan Stanley and Bank of America both posted better-than-expected Q3 results, joining the rest of the major banks that have now delivered broadly strong reports. Morgan Stanley notably reported no loan-loss provisions and topped rivals in trading performance. BofA saw a boost from M&A activity and strong net interest income. Financials gained, supporting the broader rally and reinforcing the narrative that corporate fundamentals remain intact.

• AI Enthusiasm Lifts Chips and Tech: ASML’s upbeat earnings and positive guidance on AI demand sparked gains across the semiconductor sector. AMD jumped nearly 10%, leading the Nasdaq, while Broadcom and Intel also moved higher. Nvidia, however, finished slightly lower after yesterday’s sharp drop. Despite volatility, investor conviction around AI-driven growth continues to support tech valuations.
• Safe Havens Gain as Geopolitical Risks Persist: Gold broke above the $4,200 level, underscoring ongoing investor caution amid unresolved trade tensions and a third week of the U.S. government shutdown. Treasuries held their ground, with the 10-year yield near 4.04%. The dollar weakened slightly, suggesting investors are hedging amid policy and economic uncertainty.

S&P 500 Sector Performance

Looking Ahead

While trade headlines continue to drive short-term volatility, early Q3 earnings have shown resilience in both financials and tech. Investor sentiment remains anchored by expectations of Fed rate cuts and stable consumer demand. Forward guidance during earnings season will be critical for sustaining momentum. Should volatility persist, the underlying strength in corporate earnings and monetary support still point toward a “buy-the-dip” environment heading into year-end.

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