Futures Drop As Trump-Xi Summit Underwhelms; Mag 7 Earnings Disappoint
US equity futures drop as the Trump-Xi trade truce was in line with expectations and hasn’t provided impetus for stocks to move another leg higher, after Fed Chair Powell’s pushback on another rate cut in December being a lock, while Mag7 stocks are under pressure (META -7.8%, MSFT -3.2%) as we await AAPL and AMZN tonight. As of 8:00am ET, S&P futures are down 0.2% with another wave of results due and nearly half of S&P 500 companies now having reported. Pre-market we are seeing Defensives over Cyclicals, with the exception of Metals / Miners. Gold / Silver continue their rebound as Ags and Energy are lower. Bond yields are trading near session highs, up 2bps to 4.10%, while the USD is near session highs. Besides the trade deal with China, US / Canada resumed talks and US / Mexico extended their trade truce an additional 90 days, earlier this week. The US economic calendar remains blank as government shutdown delays publication of weekly jobless claims data and 3Q GDP estimate. Fed speaker slate includes Bowman (9:55am) and Logan (1:15pm). Besides Amazon and Apple reporting after the close, the non-Mag7 earnings focus is mostly on healthcare. Ex-US, the ECB rate decision comes at 9.15a EST.
In premarket trading, Mag 7 stocks mixed: Alphabet (GOOGL) gained 7% on Q3 results that beat expectations. Analysts are especially positive on its cloud-computing business. Meta Platforms (META) sank 8% after the Facebook parent reported third-quarter results and gave an outlook. Analysts noted some concern over the company’s heavy spending. Microsoft (MSFT) was down 2% after the software company reported its first-quarter results. Analysts are broadly positive on the report, especially growth in its Azure cloud-computing business, but said investor expectations were elevated (Apple (AAPL) +0.7%, Nvidia (NVDA) is flat, Tesla (TSLA) -0.5%, Amazon (AMZN) -0.5%)
- Calix (CALX) rises 8% after the application software company reported third-quarter results that beat expectations and gave an outlook that is above the analyst consensus.
- Carvana (CVNA) falls 7% after the used-car retailer failed to live up to “elevated buy-side bar.” The company said its loan performance was solid amid rising concerns about delinquencies and distress in subprime auto lending.
- Chipotle (CMG) falls 17% after the restaurant chain lowered its full-year projection for comparable sales for a third time this year as customer traffic at its restaurants fell.
- Eli Lilly & Co. (LLY) gains 4% after raising its full-year guidance as revenue from its blockbuster weight loss and diabetes drugs beat analysts’ estimates in the third quarter.
- FMC Corp (FMC) sinks 29% after the agricultural chemical company reported worse-than-expected revenues and cut its guidance for the full year below analyst estimates.
- FormFactor (FORM) rises 14% after the semiconductor manufacturing company reported third-quarter results that beat expectations and gave an outlook that is seen as strong, prompting an upgrade.
- Guardant Health (GH) rallies 26% after the biotech company boosted its revenue guidance for the full year, beating the average analyst estimate.
- Huntington Ingalls (HII) rises 3% after the military shipbuilder reported revenue for the third quarter that beat the average analyst estimate.
- Insmed (INSM) climbs 12% after the biotech firm posted quarterly results.
- MediaAlpha (MAX) climbs 11% after the insurance technology company reported its third-quarter results and gave an outlook that analysts are positive on.
- REV Group (REVG) rises 6% after Terex agreed to buy the manufacturer of specialty vehicles.
- Sprouts Farmers Market (SFM) tumbles 23% after the grocery store chain reported comparable store sales that missed estimates and lowered its forecast for full-year comp sales.
- TransMedics (TMDX) drops 10% after the transplant-therapy company reported total revenue for the third quarter that fell short of the average analyst estimate.
In corporate news, AI startup OpenAI may target a $1 trillion valuation in an IPO as soon as next year, Reuters reported citing unidentified sources. Calpers is is planning to vote against Elon Musk’s $1 trillion Tesla compensation agreement.
On Wednesday, the Fed delivered its second straight rate reduction to support a softening labor market and said they would stop shrinking the portfolio of assets from December. Still, Chair Jerome Powell cautioned that another cut this year wasn’t a foregone conclusion, prompting money markets to pare the odds of a quarter-point move to about 60% from near certainty. The European Central Bank is due to announce its policy decision later Thursday.
“After a month of strong growth across global equity markets, I think it’s quite healthy, frankly, to take a breather,” said David Kruk, head of trading at La Financiere de l’Echiquier. “The path of the Fed — with Powell’s surprise hawkish tilt yesterday — is a big question, as is the extent of capex announced by the Mag 7.”
Trump and Xi agreed to extend a tariff truce, roll back export controls and reduce other trade barriers in the first sitdown between leaders since Trump’s return to the White House. Despite speculation over potential additional concessions, including opening access to Nvidia’s Blackwell chips, the President indicated such issues hadn’t been part of the discussions.
Mag 7 sentiment was muted with META and MSFT both under pressure; reaction to releases from tech giants was mixed as investors sought evidence that huge outlays are paying off. Alphabet demonstrated that its spending is fueling growth across Google’s businesses, particularly in cloud computing and search advertising, and said capex for the year will be $91 to $93 billion. Meta said capex in 2026 will be “notably larger” than in 2025, when it expects to spend as much as $72 billion, while Microsoft’s CFO reiterated the company can’t meet current demand for AI and other services, even after spending tens of billions in recent quarters. The three bellwethers together spent $78 billion in capex last quarter, up 89% from a year earlier.
Taking a broader look at Q3 earnings, out of the 248 S&P 500 companies that have reported so far in the earnings season, 81% have managed to beat analyst forecasts, while 15% have missed. Advance Auto Parts, Biogen, Bristol-Myers, Cigna, Comcast, Estee Lauder, Hershey, Eli Lilly, Mastercard, Altria, Merck, Roblox and S&P Global are among companies expected to report results before the market opens. Lilly’s ability to meaningful increase guidance at 3Q results may hinge on the effect of the partial loss of CVS-Caremark formulary coverage for Zepbound that started in July, according to BI.
“There has been a lot of good news priced in,” Nancy Curtin, global chief investment officer at Alti Tiedemann Global, told Bloomberg TV. “Having said that, we are still in the midst of the third-quarter earnings. If we end up again with 12-13% earnings growth in this quarter, with expectations on the rise for next quarter – that helps sustain markets.”
Carmakers around the world are planning to scale back production after an export freeze on Chinese semiconductor company Nexperia threatened to disrupt the industry’s supply chains, with Volkswagen the latest to caution that its outlook depends on sufficient supply of chips.
Consumer trends are in focus with Chipotle lowering projections for a third time this year as customer traffic fell, while eBay gave a weak profit outlook for the holiday period. In Europe, Carlsberg sees lower beer sales on weaker consumer demand and Remy Cointreau cut its outlook amid subdued demand across markets including China, Europe and the US.
European stocks fell as investors responded to a busy roster of earnings and looked ahead to an interest-rate decision by the European Central Bank. Drinkmaker Campari leads gains on the Stoxx 600 after a strong report, while at the other end of the index, weaker results hurt the shares of Norwegian defense group Kongsberg and advertising agency WPP. Stoxx 600 falls 0.3% to 573.49 with 374 members down, 216 up, and 10 unchanged. Here are the biggest movers Thursday:
- Campari jumps as much as 9.6% and was the best performing stock on the Stoxx 600 after the Italian spirits group announced surprising progress in terms of profitability despite disappointing sales for its Aperol brand
- Jeromino Martins jumps as much as 8.1% after retailer reported higher-than-expected profitability in 3Q. For analysts it shows that the company was able to mitigate slowing like-for-like sales in Poland by higher cost discipline
- Lufthansa shares rise as much as 5.4%, the most since June 24. The German flag carrier reiterated its expectation for a significant increase in full-year adjusted Ebit and reported a slight profit beat in the third quarter
- Raiffeisen shares rise as much as 5.9% after the Austrian lender delivers consensus-beating third-quarter results; KBW sees a good set of results supported by another quarter of benign asset quality
- Airbus gains as much as 2.7%, setting a new record high, after the airplane and military equipment manufacturer reports third-quarter adjusted Ebit that beat consensus expectations
- ING Groep shares rise as much as 3.3%, the most in four months, as the Amsterdam-headquartered bank’s third-quarter profits come in ahead of forecasts, largely driven by higher revenues
- Ayvens gains as much as 11%, the most since May 2024, as analysts welcomed the car leasing company’s third-quarter results, which included a share buyback and a special dividend
- Kongsberg shares drop as much as 15%, the most since May 2022, after the military technology company reported Ebitda for the third quarter that missed the average analyst estimate
- Stellantis falls as much as 6.4% as analysts focus on the potential one-off charges in the second half of the year and what they could mean for cash flow. JPMorgan notes that the carmaker’s pricing failed to fully offset FX impact
- Prysmian falls as much as 8% after the cables manufacturer’s guidance disappointed investors; JPMorgan says the extend of the upgrade is likely to disappoint the market going forward
- Credit Agricole falls as much as 3.4% as a miss on costs saw pre-provision operating profit come in broadly in-line with expectations despite a small beat on revenue
- Schneider Electric falls as much as 5% on solid albeit merely in-line third-quarter report, according to analysts, with JPMorgan flagging buy-side expectations may have been more elevated leading into the report
- WPP shares slump as much as 13% to the lowest since 2008, after the advertising agency reduced organic growth guidance that was already slashed in July. Its 3Q revenue drop was also more severe than analysts had expected
- Amplifon drops as much as 6.4%, the most since July 30, after trimming its full-year sales growth guidance, while maintaining its adjusted Ebitda margin goal. JPMorgan says 3Q results fell short of expectations
- Carlsberg shares slip after the brewer reported third-quarter results in line with low expectations, with consumer weakness in markets including China and Ukraine weighing on volumes
Earlier in the session, Asian stocks turned lower after Donald Trump and Xi Jinping concluded a meeting that was seen as easing tensions between the world’s two largest economies but may have been largely priced into assets. The MSCI Asia Pacific Index fell 0.4%, reversing an early advance of as much as 0.5%. Softbank and Wesfarmers were among key drags. South Korean stocks gained after the nation sealed a trade deal with the US and Samsung Electronics posted a big bump in profits from its chip business. Details on further aspects of the agreement will be key for the Asian stock rally, with the regional benchmark on course for its seventh straight monthly gain. Stocks rose in Japan after the central bank held interest rates. Shares fell in Australia, India, Vietnam and the Philippines.
In FX, the Bloomberg Dollar Spot Index edges higher. The yen weakened below 154 per dollar after the Bank of Japan left its benchmark interest rate unchanged and offered no new hints on when it might hike.
In rates, treasuries are lower with most yields about 1-2bps higher vs Wednesday’s closing levels. US 10-year near 4.09% slightly exceeds Wednesday’s high, adding to losses that lifted tenors other than the 30-year at least 10bp; German and UK yields are cheaper by 2bp to 4bp across curves. Fed-dated OIS also hover around Wednesday’s closing levels, pricing in around 15bp of easing for the December rate decision. German 2-year topped 2% for the first time in three weeks ahead of the ECB monetary-policy decision at 9:15am New York time. European yields are higher across the curve. French GDP comfortably topped estimates, German output stagnated. Focal points of US session include speeches by Fed’s Bowman and Logan. S&P 500 are down slightly amid evaluation of US-China trade truce.
In commodities, gold prices rising and testing $4,000/oz, oil slipping with WTI sitting around $60/barrel and Brent short of $65/barrel.
Looking ahead, the US economic calendar remains effectively blank as government shutdown delays publication of weekly jobless claims data and 3Q GDP estimate. Fed speaker slate includes Bowman (9:55am) and Logan (1:15pm)
Market Snapshot
- S&P 500 mini -0.1%
- Nasdaq 100 mini little changed
- Russell 2000 mini +0.2%
- Stoxx Europe 600 -0.3%
- DAX little changed
- CAC 40 -0.4%
- 10-year Treasury yield -1 basis point at 4.07%
- VIX -0.9 points at 16.05
- Bloomberg Dollar Index little changed at 1214.55
- euro +0.2% at $1.1624
- WTI crude -0.5% at $60.15/barrel
Top Overnight News
- Donald Trump hailed an “amazing meeting” with Xi Jinping that resulted in them extending a tariff truce for another year, rolling back export controls and reducing other trade barriers. Beijing agreed to pause controls on rare-earth magnets and, as Trump put it, buy “tremendous” amounts of American soybeans. The leaders didn’t discuss approving sales of NVDA’s Blackwell chips to China. BBG
- The Senate votes 50-46 to block Trump’s tariffs on Canada (this action, the second in as many days after the Senate voted to remove Trump’s Brazil tariffs, is most likely symbolic since it likely will not pass in the house). WaPo
- China pledged to work with Washington to resolve the fate of TikTok’s US business, stopping short of saying it’s agreed to Trump’s proposed deal. BBG
- President Trump's administration taps three different funds to pay US troops this Friday: Axios.
- Senate Majority Leader John Thune said Wednesday he expects to engage “pretty soon” with a group of rank-and-file Senate Democrats about ending the 29-day-and-counting government shutdown. If a meeting happens, it would be a rare bipartisan gathering involving a top party leader. Politico
- The Bank of Japan kept interest rates steady on Thursday, with its governor sending the strongest signal yet that a rate hike was possible as soon as December depending on the outlook for wages next year. RTRS
- The euro-area economy expanded more than anticipated in the third quarter, displaying resilience to higher US tariffs, with France recording its strongest growth in over two years. German GDP stagnated, as expected. BBG
- Trump ordered nuclear weapons trials in response to Russia’s recent tests of nuclear-powered underwater drones and cruise missiles. The US’s last nuclear explosive test was in 1992. BBG
- OpenAI is preparing to file for an IPO as soon as next year that may value the company at $1 trillion. RTRS
- Gold rebounded after a 5% slide over four sessions as investors digest the outcome of the Trump-Xi meeting and sniff out the chances for more Fed cuts. Bullion has advanced about 50% this year and hit a record $4,380 an ounce last week. BBG
- Megacaps following last night’s earnings: GOOGL +8%: Topline accelerates across the board with Cloud, Search, and YouTube all ahead; FY25 Capex guide raised… META -8%: 2026 Capex to be notably larger than 2025 with expenses to grow at a faster pace; 3Q Revenues accelerate and 4Q guided ahead… MSFT -2.5%: 1Q Azure growth beats guide by 2pts (inline with whispers); F2Q Azure guided stable and Capex to grow. Goldman
Trade/Tariffs
- US President Trump said the meeting with Chinese President Xi was amazing and a lot of decisions were made, while they will be providing conclusions on very important things and agreed that Xi will work very hard to stop fentanyl. Trump confirmed that China soybean purchases will start immediately and they agreed to reduce China fentanyl tariffs to 10%, as well as noted that they did discuss chips and will be talking to NVIDIA and others about taking chips, but are not talking about Blackwell chips. Trump said the rare earth issue has been settled and there are no more roadblocks on rare earths, while he said it's a one-year agreement that will be extended and tariffs on China will be 47%, down from 57%. Furthermore, he is going to China in April and Xi will be coming to the US sometime after that, while he rated the meeting a 12 out of 10.
- Chinese President Xi told US President Trump at the start of the meeting that it is a pleasure to meet him and they do not always see eye to eye, but this is normal and it is normal for economies to have frictions, while he added that China’s development goes hand in hand with the vision to make America great again. Xi also stated that China and the US should be partners and friends, as well as noted that trade teams have reached a basic consensus and they are ready to continue working to build a solid foundation for two-way ties.
- US Treasury Secretary Bessent said the announcement after the Trump-Xi meeting will be a resounding victory for our farmers.
- China's President Xi says China's economy is like an ocean, according to the Chinese state media. Conversation is better than confrontation when dealing with trade. On the Trump meeting: Both sides have good prospects for AI, and the US and China should aim to narrow down list of problems and extend cooperation.
- China Commerce Ministry confirms the agreement to extend some tariff exemption measures, China is to adjust some countermeasures. Says the US is extending the suspension of 24% reciprocal tarif