The major index futures indicate a modestly higher opening on Tuesday, suggesting that stocks may experience additional gains following the rally observed yesterday. The markets could sustain the recent upward momentum that has driven the major averages to new record highs on Monday, fueled by optimism regarding a potential trade agreement between the U.S. and China. The announcement of a rare metals agreement between the United States and Japan could bolster confidence in anticipation of President Donald Trump’s upcoming discussions with Chinese leader Xi Jinping later this week. Buying interest appears to be relatively muted, as traders anticipate the Federal Reserve’s forthcoming monetary policy announcement on Wednesday. While the Fed is anticipated to reduce interest rates by an additional quarter point, market participants will focus on the accompanying statement and Fed Chair Jerome Powell’s remarks following the meeting for insights regarding the potential for subsequent rate reductions. Reports currently indicates a 94.9 percent probability that the Fed will reduce rates by an additional quarter point in December; however, perspectives regarding the likelihood of further rate cuts in early 2026 are more varied.
Traders are anticipating the forthcoming earnings announcements from several prominent technology firms, including Alphabet, Apple, Meta Platforms, Microsoft, and Amazon, which are scheduled to disclose their quarterly results in the near future. Following a significant uptick at the beginning of the session, equities maintained a robust performance for the duration of the trading day on Monday. The major averages extended the robust gains achieved in the previous week, culminating in new record closing highs. The major averages experienced additional gains as the day progressed, achieving new session highs. The Nasdaq experienced an increase of 432.59 points, representing a rise of 1.9 percent, reaching a level of 23,637.46. The S&P 500 saw a gain of 83.47 points, which corresponds to a 1.2 percent increase, bringing it to 6,875.16. Meanwhile, the Dow advanced by 337.47 points, equating to a 0.7 percent rise, settling at 47,544.59.
The recent surge in equity markets can be attributed to growing optimism surrounding a prospective trade agreement between the United States and China, coinciding with an eagerly awaited meeting between President Donald Trump and President Xi Jinping scheduled for later this week. Treasury Secretary Scott Bessent engaged with Chinese officials in Malaysia over the weekend, expressing confidence that the discussions have led to a “very successful framework” for Trump and Xi to deliberate on Thursday. Bessent also indicated his expectation that China will resume its purchases of U.S. soybeans and postpone the export controls on rare earths that have contributed to the recent escalation in tensions. During his journey to Japan, Trump conveyed a sense of optimism regarding the prospect of finalizing a trade agreement with China, following the signing of distinct trade and mineral accords with his counterparts from Malaysia and Cambodia.
The positive sentiment regarding the trajectory of interest rates may have played a role in bolstering market’s performance in anticipation of the Federal Reserve’s monetary policy announcement. Semiconductor stocks exhibited notable strength in the market, as evidenced by the Philadelphia Semiconductor Index, which advanced by 2.7 percent, achieving a new record closing high. Qualcomm experienced a notable increase of 11.1 percent, contributing to the sector’s upward momentum following the announcement of new artificial intelligence accelerator chips aimed at competing with Nvidia and Advanced Micro Devices. Considerable strength also emerged among telecom stocks, as reflected by the 1.4 percent gain posted by the North American Telecom Index. Transportation, steel, and software stocks exhibited significant strength, whereas gold stocks experienced a marked decline in tandem with the price of the precious metal.