Boeing, Tesla, RTX: Which stocks to watch for investors during Trump's visit to the PRC

The meeting between US President Donald Trump and Chinese President Xi Jinping on Thursday and Friday could be the next test of strength for the US stock market, Bloomberg writes. According to Piper Sandler, the S&P 500 index is expected to fluctuate by about 0.7% on these days.

Stocks of companies whose CEOs are flying to Beijing with the U.S. leader are already on the rise, with Nvidia shares up 2.3% on Wednesday after its CEO Jensen Huang was invited to join the delegation. Shares of Micron Technology and Qualcomm added 4.8% and 1.4%, respectively. Tesla rose 2.7% and Boeing rose 1.6%. The heads of all these companies are also flying to China. Talks between the leaders of the countries will be held on Thursday and Friday.

Investor optimism despite geopolitical and inflation risks makes the US market, which is at historic highs, more vulnerable to negative surprises, Bloomberg warns. The two sides are expected to discuss extending the truce on duties, resolving the Iran crisis, and trade in sectors such as aircraft, agriculture, critical minerals and technology.

"Call options trading volumes remain near record levels, so any news that is not positive for technology and AI companies in the context of the relationship between the U.S. and China - or in the case of a new escalation of tensions around Iran - will be taken negatively by investors," Danny Kirsch, head of options at Piper Sandler, told the agency. According to him, any new threats of a trade war could trigger a sell-off in stocks.

Bloomberg has compiled a list of companies whose reactions Wall Street investors will be watching particularly closely during the summit.

China may order about 500 Boeing 737 Max airplanes, Bloomberg previously reported. The aircraft giant's CEO Kelly Ortberg, who is also attending the summit, told analysts the trip would be a "significant opportunity."

The likelihood of a deal announcement is very high, said Bloomberg Intelligence analyst George Ferguson. "Boeing shares may get a boost to growth, although the effect on the company's reporting will not manifest itself soon, if at all," he said. Ferguson points out that Boeing's airplane order effectively means buying General Electric's engines. It will also support demand for equipment from RTX's Collins division.

Any commitments by China to buy U.S. agricultural products would be a boost for U.S. farmers who have been struggling, including because China avoided buying their goods during the trade war last year. Shares of tractor maker Deere & Co. and seed supplier Corteva could react the strongest, said Oppenheimer analyst Kristen Owen.

According to Bloomberg sources, Chinese officials are discussing with their U.S. counterparts the purchase of agricultural crops, including corn and soybeans. That said, geopolitical tensions could derail any agreements. "If the market faces an unpleasant surprise, pressure on farmers will increase, although the additional downside risk is relatively limited," Owen said.

China has used its control of rare earth metals as a pressure tool, prompting the U.S. to develop its own supply chains. Any agreement to supply those metals poses a risk to MP Materials shares, JPMorgan analyst Bill Peterson wrote in a note to clients. The Pentagon acquired a stake in the company last year, after which its stock price rose more than 100 percent. The U.S. government has invested in rare earth metals producer USA Rare Earth, as well as in critical minerals companies Lithium Americas and Trilogy Metals.

China's access to U.S. chips could also be a topic of negotiation. Nvidia has already obtained a license to supply the country with some of its lower-performance graphics processors used in AI computing - a small step toward returning to the world's largest chip market, Bloomberg writes.

The countries may conclude an agreement affecting both rare earth metals and semiconductors, says Josh Lipsky, senior director of the Atlantic Council's GeoEconomics Center. However, rather than breakthrough new agreements, the parties may simply reaffirm promises already made to supply products - and investors will need time to understand the real-world implications of these decisions, he notes.

Any new expansion of Nvidia's ability to sell into China could be an additional growth driver for the U.S. semiconductor company, whose shares are already trading at record levels. "Nvidia's projections now include zero sales to China," Horizon Investments chief investment officer Scott Ladner reminded. - If that changes, it will seriously impact the demand outlook for the entire chip industry."

This article was AI-translated and verified by a human editor