Morning in New York: geopolitics in the spotlight

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research

The main event of the current week for the investment community was the talks between US President Donald Trump and Chinese President Xi Jinping in Busan, South Korea, on Thursday. This was the first face-to-face meeting between the leaders since the beginning of the second term of the incumbent head of the White House.

Trump said the two sides have reached an agreement on rare earth elements and critical minerals that will be renegotiated annually. Tariffs on imports from China will be reduced from 57% to 47% by halving duties related to trade in fentanyl precursors to 10%.

For its part, China pledged to "actively combat the spread of fentanyl" and resume purchases of U.S. agricultural products, including soybeans. Against this backdrop, its futures (CME Group) fell 1.6%, while China's CSI rare earth index rose more than 2%. Trump also said he did not discuss with his Chinese counterpart the issue of supplying China with Nvidia's advanced AI chip Blackwell, announced the day before, saying that the relevant decision should be made by the manufacturer itself. Also on the agenda of the talks was not the topic of Taiwan. Trump's visit to China is scheduled for April 2026, followed by Xi's visit to the States.

Eli Lilly (LLY), Mastercard (MA), Merck & Co (MRK), S&P Global (SPGI), Comcast (CMCSA), Bristol-Myers Squibb (BMY), Roblox (RBLX) will report quarterly results before the opening of trading. Apple (AAPL), Amazon (AMZN), Strategy (MSTR), Coinbase Global (COIN), Western Digital (WDC), Reddit (RDDT), Gilead (GILD) will report after the end of the main session.

Futures on US indices show about zero dynamics. We assess the balance of risks as neutral with moderate volatility. We focus on S&P 500 fluctuations in the range of 6850-6950 points (from -0.6% to +0.9% to the previous session's closing level).

- Shares of Alphabet (GOOGL) gain almost 7% after the publication of strong quarterly results. The corporation's revenue exceeded $100 billion (+16% YoY) for the first time in the comparable period thanks to increased revenue from advertising and cloud business. Earnings per share came in at $2.87 with a consensus of $2.29, and Google Cloud segment revenue climbed 34% to $15.2 billion. CEO Sundar Pichai said the integration of AI into Google products "provides strong growth momentum" and expands the potential for future growth.

- ServiceNow (NOW) was up more than 3% in after-hours trading, reacting to quarterly results that exceeded analysts' expectations. The strong reporting performance was driven by strong demand for AI tools to automate workflows. Issuer earnings per share came in at $4.82 with a consensus of $4.26, while revenue rose 22% YoY to $3.41 billion. The company raised its 2025 revenue, margin and cash flow forecasts and announced a 5:1 stock split.

- C.H. Robinson (CHRW) met the quarterly release with active growth. The company's adjusted earnings per share amounted to $1.4, compared to the consensus of $1.3. Revenue declined by 10.9% YoY to $4.1 billion, while North American volumes increased by 3% and operating margin improved to 31.3% despite an unfavorable freight market environment. The management noted the effectiveness of strategic initiatives and strengthening of the company's competitive position.

- Carvana (CVNA) shares fell 4% even though the company reported record revenue, up 55% YoY to $5.65 billion, and sold 155.9k vehicles, exceeding analysts' expectations. Despite net income of $263 million and a 4.7% margin, investors are concerned about the decline in adjusted EBITDA margin to 11.3%. Management expects to sell more than 150,000 vehicles in the fourth quarter and keep annual EBITDA near the top end of the $2-2.2 billion range.

- Microsoft (MSFT) reported better-than-expected earnings and revenue for the quarter, thanks to accelerating growth in its cloud business fueled by strong demand for Azure. EPS came in at $4.13 vs. estimates of $3.66, and revenue rose to $77.67 billion vs. expectations of $75.32 billion. Intelligent Cloud revenue rose 28% to $30.9 billion, while Azure's same metric added 40% YoY, beating analysts' average guidance. However, Microsoft's own revenue guidance for the current quarter was below consensus, which caused the company's shares to decline by 3.9% in the post-market.

Trading on October 29 on the U.S. stock exchanges ended multidirectional amid increased volatility after the comments of Fed Chairman Jerome Powell. S&P 500 closed at zero, Nasdaq 100 added 0.41%, Dow Jones decreased by 0.16%, Russell 2000 fell by 0.87%. Most sectors of the broad market closed in the negative. High-tech (XLK: +0.72%) and energy (XLE: +0.74%) companies were the leaders of growth. Non-cyclical consumer goods producers (XLP: -2.36%) and the real estate industry (XLRE: -2.73%) were the outsiders.

Almost all representatives of the "Magnificent Seven" ended the trades in the plus. The most notable growth was demonstrated by Nvidia (NVDA: +2.99%) after the American president announced plans to discuss the supply of Blackwell series chips to China at a meeting with the leader of this country.

The key event of the session was the meeting of the Federal Reserve System, following the results of which the regulator, as expected, lowered the rate by 25 bps to a range of 3.75-4%. - to the range of 3.75-4%. In addition, the Fed announced the end of its quantitative tightening (QT) program as of December 1. There was disagreement within the open market committee over the adjustment of monetary conditions. Kansas City FRB head Jeffrey Schmid favored keeping the rate unchanged, while Board of Governors member Stephen Miran favored a 50bp cut. Fed Chairman Jerome Powell noted that another rate cut in December "is not a foregone conclusion", emphasizing the uncertainty associated with the lack of official macroeconomic data due to the ongoing shutdown.

- Seagate Technology (STX: +19.1%) rose after reporting better-than-expected earnings and revenue. Management raised its guidance for the next quarter, citing strong demand from the data center and artificial intelligence segments. Analysts were positive on the increase in HAMR disk shipments and improved demand guidance through 2027.

- Shares of Caterpillar (CAT: +11.6%) reacted positively to the release of quarterly results, as the company's revenues and profits were above average market forecasts. The Energy & Transportation segment was the main driver of growth, thanks to higher demand for data center generators. The company noted a strong order book and raised its revenue and earnings forecast for 2025.

- Boeing (BA: -4.4%) was under pressure after the release of its latest quarterly earnings. The company reported a $4.9 billion loss on the 777X program and postponed the start of deliveries of the 777-9 model to 2027. At the same time, the airline reported positive free cash flow for the first time since the end of 2023 and its defense division returned to profit.

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