"In war, the victorious strategist only seeks battle after the victory has been won, whereas he who is destined to defeat first fights and afterwards looks for victory. Thus, a wise commander avoids unnecessary conflict and seeks temporary truces to strengthen his position.” ✍️☮️

- Sun Tzu

✅ Tech stocks dragged Wall Street lower on Thursday as investors weighed the newly announced U.S.–China trade truce between Presidents Trump and Xi, dimming hopes for another interest rate cut. Traders also braced for the next wave of megacap earnings after a mixed showing from several members of the “Magnificent Seven.”

✅ Trump and Xi agree to fragile trade truce as China pauses rare earth export controls for one year.

✅ Palantir sues former engineers for launching ‘copycat’ AI firm Percepta.

✅ Alphabet surges to record high on $102 billion quarter as AI investments accelerate.

✅ Fed cuts rates by 25 basis points, but Powell warns December move is not guaranteed.

✅ Meta shares tumble 10% as AI spending surge overshadows strong third-quarter results.

✅ Gold climbs as markets react to Trump–Xi meeting and easing trade tensions.

MARKET SNAPSHOT

↘ Dow                            47,522.12                      - 0.23%
↘ Nasdaq                      23,581.15                       - 1.57% 
↘ S&P                             6,822.34                       - 0.99% 

Trump and Xi Strike Fragile Trade Truce, China Pauses Rare Earth Export Controls for One Year

President Donald Trump and Chinese President Xi Jinping reached a fragile trade truce during a high-stakes meeting in South Korea on Thursday, easing tensions over rare earth elements that had threatened to ignite a deeper economic conflict between the world’s two largest economies.

Beijing agreed to pause for one year the sweeping export controls on rare earths announced on Oct. 9, which had pushed both sides toward a potential trade war. In exchange, Trump said the United States would immediately cut tariffs on Chinese goods related to fentanyl to 10% from 20%, lowering the overall tariff rate on Chinese imports to roughly 47%. Trump had previously threatened to impose 100% tariffs on Nov. 1 if China did not roll back the controls.

Speaking aboard Air Force One after the meeting, Trump called the agreement a “one-year deal” that he expects will be “routinely extended as time goes by.” He said he plans to visit China in April, while Xi is expected to travel to the United States at a later date, possibly to Palm Beach, Florida, or Washington, D.C. “We have a deal,” Trump said. “Now, every year we’ll renegotiate the deal, but I think the deal will go on for a long time. All of the rare earth has been settled, and that’s for the world.”

As part of the truce, the United States will postpone a rule issued in September that would have blacklisted majority-owned subsidiaries of Chinese firms, according to China’s Ministry of Commerce. The two countries also agreed to suspend port docking fees for one year, another step intended to de-escalate trade tensions.

China’s export controls had given Beijing powerful leverage, as the U.S. remains heavily dependent on China for rare earths used in advanced technologies such as electric vehicles, semiconductor manufacturing, and weapons systems. Analysts said China used its dominance in these materials, along with an ongoing soybean embargo, to pressure Washington into lowering tariffs. “Xi was ready for Trump in his second term and has a powerful weapon in rare earths,” analysts at Piper Sandler wrote in a note, adding that China appears to be “getting the better of the U.S.” in the latest negotiations.

Still, the truce left major areas unresolved. It remains unclear what specific commitments China made regarding U.S. agricultural and energy imports or cooperation on fentanyl trafficking. Trump told reporters that Beijing agreed to buy large quantities of soybeans, sorghum, and other farm products, including 25 million metric tons of soybeans annually over the next three years, according to Treasury Secretary Scott Bessent. However, China’s Ministry of Commerce merely stated that both sides had agreed to expand agricultural trade, without offering details.

Trump also said China might purchase substantial amounts of oil and gas from Alaska, though Energy Secretary Chris Wright and Interior Secretary Doug Burgum will meet with Chinese officials to negotiate terms. The president confirmed he discussed the export of Nvidia chips with Xi but said the talks did not involve the company’s most advanced Blackwell processors. “That’s really between China and Nvidia,” Trump said, noting that the U.S. would serve more as an “arbitrator.”

China’s Ministry of Commerce said Beijing would work with the United States to “resolve issues related to TikTok,” though Trump did not mention the platform in his remarks or in a Truth Social post about the deal.

Former U.S. Ambassador to China Nicholas Burns described the outcome as an “uneasy truce” in a long and still-simmering trade war. “Where we are is an uneasy truce in a long, still simmering trade war,” Burns told CNBC, cautioning that the agreement is far from comprehensive and may prove temporary.

Palantir Sues Former Engineers Over Alleged “Copycat” AI Startup

Palantir Technologies filed a lawsuit on Thursday against two former senior engineers, alleging they misappropriated the company’s proprietary information to launch a rival AI firm, Percepta AI.

The Manhattan federal court complaint claims that Radha Jain and Joanna Cohen, who had access to Palantir’s core software and customer data, violated confidentiality and non-compete agreements by founding Percepta AI. The company says Percepta’s products mirror Palantir’s AI-powered tools, designed to help businesses and government agencies optimize data they already hold.

Jain left Palantir in November 2024 after contributing to its flagship software, while Cohen, who worked on AI solutions for individual clients, resigned in February. Percepta AI, backed by venture capital firm General Catalyst, was publicly unveiled earlier this month.

“Jain’s and Cohen’s deception and violation of their agreements with Palantir are black and white,” the lawsuit states. Palantir is seeking a court order to enforce the agreements, which bar the former employees from competing for a year, soliciting Palantir clients or staff for two years, and using confidential company information outside their employment.

Percepta reportedly hired at least 10 former Palantir employees, nearly half its current workforce, including co-founder and CEO Hirsh Jain, raising further concerns for Palantir.

Neither Percepta nor the engineers named in the lawsuit immediately responded to requests for comment.

Alphabet Soars to Record High on Record $102 Billion Quarter as AI Investments Accelerate

Alphabet shares jumped 4% on Thursday after the Google parent reported third-quarter earnings that easily topped Wall Street estimates and boosted its full-year spending plans to meet surging demand for artificial intelligence infrastructure.

The company posted adjusted earnings of $3.10 per share on revenue of $102.35 billion, surpassing analysts’ expectations of $2.33 per share and $99.89 billion in revenue, according to LSEG. It marked the first time Alphabet’s quarterly revenue has topped the $100 billion mark.

Capital expenditures for the year are now projected between $91 billion and $93 billion, up from $85 billion last quarter, as the company invests heavily in data centers and AI capabilities. “Looking out to 2026, we expect a significant increase in CapEx,” Chief Financial Officer Anat Ashkenazi told investors on the earnings call.

CEO Sundar Pichai said Google Cloud ended the quarter with a $155 billion backlog, underscoring continued enterprise demand. Analysts said the results reinforced Alphabet’s leadership position in AI while showing resilience in its core search business.

Deutsche Bank described the report as having “virtually no hair on the print,” noting the strong performance despite the stock’s 43% rally since last quarter’s earnings. Goldman Sachs said Alphabet “has climbed a steep wall of worry” surrounding the AI transition and raised its price target to $330 from $288, citing confidence in the company’s execution.

Search revenue rose 15% year-over-year to $56.56 billion, easing concerns that AI-driven changes could disrupt Google’s dominant advertising model. JPMorgan analysts said early signs suggest the AI transition is “more opportunity than threat,” lifting their price target to $340 from $300.

The combination of record revenue, accelerating AI investment, and stable search growth cemented Alphabet’s role as one of the clear winners in the ongoing AI race.

Fed Cuts Rates 25 Basis Points, Powell Signals December Move Not Guaranteed

The Federal Reserve on Wednesday reduced its benchmark overnight lending rate by a quarter percentage point, or 25 basis points, bringing the target range to 3.75%–4%. While the cut was widely expected, Fed Chair Jerome Powell emphasized that further reductions at the December meeting are far from certain.

“In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December,” Powell said during his post-meeting press conference. “A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it.”

The decision to cut rates was approved in a 10-2 vote, with newly appointed Governor Stephen Miran advocating for a larger reduction this week, while Kansas City Fed President Jeffrey Schmid opposed any cut. Powell noted a “growing chorus” within the committee recommending that policymakers wait at least one full cycle before considering another move.

Markets reacted cautiously. The Dow Jones Industrial Average closed down 74 points, or 0.2%, while the S&P 500 ended virtually flat. The Nasdaq outperformed, climbing 0.6% to a fresh record close. All three indexes had reached intraday highs earlier in the session.

Powell highlighted that recent economic data points to somewhat firmer growth than expected, while labor market conditions appear to be softening. “Available evidence shows a softening labor market,” he said, noting that the Fed is monitoring employment developments “very, very carefully,” particularly following major layoffs at several large U.S. companies.

He cited recent corporate moves, including Amazon’s 14,000-job cut, UPS’s planned 48,000 layoffs, Paramount’s reduction of at least 1,000 positions, and Target’s 1,800 corporate job cuts, as areas the Fed is watching closely. Powell specifically mentioned companies referencing AI-related shifts in their workforce decisions.

The Fed’s cautious stance underscores the delicate balancing act of supporting growth while keeping inflation in check, with investors now closely watching signals for the December meeting.

Meta Platforms’ stock dropped more than 10% Thursday after the social media giant announced an increase in its 2025 capital expenditure guidance, sparking concerns that its aggressive artificial intelligence investments could weigh on near-term returns despite strong quarterly performance.

The company now expects capex between $70 billion and $72 billion, up from its previous $66 billion–$72 billion range, as it competes with peers to develop advanced AI tools. CEO Mark Zuckerberg defended the spending on the earnings call Wednesday, saying the company is already seeing returns in its core business and is investing to avoid underbuilding capacity.

“It’s pretty early, but I think we’re seeing the returns in the core business. That’s giving us a lot of confidence that we should be investing a lot more,” Zuckerberg said. He added that Meta is “aggressively” preparing for the arrival of superintelligence to position the company for a “generational paradigm shift in many large opportunities.”

Meta has been ramping up AI initiatives, including a $14.3 billion investment in AI startup Scale AI earlier this year, and recruiting Scale AI’s CEO Alexandr Wang to lead its Superintelligence Labs, alongside former GitHub CEO Nat Friedman. The company has also signed multiple new cloud deals to support its AI infrastructure.

For the third quarter, Meta reported adjusted earnings of $7.25 per share on $51.24 billion in revenue, surpassing Wall Street estimates. Revenue rose 26% year-over-year, though the company reported a $15.93 billion tax charge linked to President Trump’s One Big Beautiful Bill Act.

The stock move comes as other tech giants are also increasing AI-related spending. Alphabet raised its capital expenditure forecast to $91 billion–$93 billion, while Microsoft indicated it expects higher spending growth this fiscal year. Analysts say Meta’s market reaction reflects investor caution over balancing heavy AI investments with profitability, even amid strong financial results.

📉 ON THE MOVE AND NOTABLES 📈

✔️ The Fed tempered expectations for a December rate cut yesterday, sending Treasury yields higher and contributing to Thursday’s mild risk-off tone. Fed Chair Powell pushed back on expectations of another near-certain rate cut before year-end. The Fed delivered the expected quarter-point reduction, lowering its target range to 3.75%–4.00%, but Powell emphasized that a December cut is not guaranteed

✔️ Futures markets now price a 68% chance of a Fed rate cut in December, down from 90% earlier this week.

✔️ Mortgage rates dipped to their lowest level in over a year.

✔️ Oil prices held steady on Thursday.

✔️ Gold climbed on Thursday, recovering from a recent streak of losses. Bullion gained as much as 2.2% after falling nearly 5% over the previous four sessions.

✔️ On the trade front, the U.S. and China agreed to a truce: the U.S. will halve fentanyl-related tariffs from 20% to 10%, cutting total tariffs on Chinese goods to 47% from 57% for one year, while China will pause rare-earth curbs and resume U.S. soybean purchases.

✔️ The U.S. and South Korea finalized a trade deal under which Seoul will invest $350 billion in the U.S. in exchange for tariff relief.

✔️ The Bank of Japan left rates unchanged on Thursday and the European Central Bank is widely expected to do the same.

✔️ Reddit (RDDT) reported third quarter revenue ahead of Wall Street's forecasts on Thursday and said that its user growth slowed less than analysts expected.

✔️ Nvidia Corp. (NVDA) plans to invest as much as $1 billion in the artificial intelligence company Poolside, according to people familiar with the matter — part of a deal that would quadruple the valuation of the AI startup.

✔️ Microsoft (MSFT) slipped despite easily surpassing Wall Street’s earnings and revenue expectations. The company reported a 40% quarterly jump in Azure cloud revenue, but results were overshadowed by a major Azure outage the same day.

✔️ Amazon (AMZN) reported Q3 earnings after the bell on Thursday, beating on the top and bottom lines as its cloud business grew faster than expected.

✔️ Netflix (NFLX) on Thursday said it will split its stock 10-for-1, meaning Netflix shareholders will receive 10 shares for every one share of the company they currently own.

✔️ Meta (META) plunged even as earnings beat forecasts despite an unexpected $16 billion charge. Fourth-quarter guidance matched Wall Street’s consensus, but spending projections unnerved investors. Meta now expects total expenses of $116–$118 billion this year, up from prior guidance of $114–$118 billion, with the increase driven by AI data center investments. The company also signaled higher capital expenditures in 2026, fueling concerns about elevated long-term spending.

✔️ Roblox (RBLX) shares slipped after the company said the operating margin could decline year-over-year due to increased spending on infrastructure and safety.

✔️ Alphabet (GOOGL) surged after posting earnings and revenue far above expectations. The company raised its capital expenditure outlook and reported cloud revenue growth of 34% for the quarter, up from 32% in the prior period.

✔️ Eli Lilly (LLY) climbed after delivering strong earnings and lifting full-year guidance. Sales of diabetes treatment Mounjaro jumped 109% year over year, while obesity drug Zepbound surged 184%.

✔️ Nvidia (NVDA) remains up nearly 15% over the past week, recently topping a $5 trillion market capitalization—equivalent to about 16.5% of U.S. nominal GDP. CNBC reported that during  the Trump–Xi meeting, the two leaders discussed U.S. chip exports, with China expected to engage directly with Nvidia and other suppliers.

✔️ Merck (MRK) fell despite beating earnings estimates. Sales of cancer therapy Keytruda rose 10%, though the company narrowed its full-year outlook.

✔️ Chipotle’s (CMG) stock tumbled after the company cut its full-year forecast for same-store sales.

✔️ Starbucks (SBUX) reported weaker-than-expected quarterly earnings, but the company saw same-store sales grow for the first time in nearly two years.

✔️ Bitcoin (BTC) slipped, reflecting a possible “risk-off” tone following the Fed’s latest move.

✔️ Nike (NKE) dropped, showing little benefit from renewed hopes of a U.S.–China trade truce. Retail peers lululemon (LULU), Estee Lauder (EL), Dick’s Sporting Goods (DKS), McDonald’s (MCD), and Hershey (HSY) all fell more than 1%. Investors appear to be rotating capital away from defensive consumer names toward higher-growth sectors.

✔️ Homebuilders Lennar (LEN), D.R. Horton (DHI), and Toll Brothers (TOL) sank as investors questioned whether rate cuts are still on the table, potentially keeping mortgage costs elevated. Home improvement retailers Lowe’s (LOW) and Home Depot (HD) each lost about 2%.

💲What Else to Watch💲

🟢 October 31: Earnings expected from Exxon Mobil (XOM), Chevron (CVX), AbbVie (ABBV), AON (AON), W.W. Grainger (GWW), Colgate-Palmolive (CL), and Dominion Energy (D).

🟢 November 3: October ISM Manufacturing Index and expected earnings from Palantir Technologies (PLTR), Hims & Hers Health (HIMS), Clorox (CLX), and Diamondback Energy (FANG).

🟢 November 4: September factory orders, September job openings (JOLTS), and expected earnings from Shopify (SHOP), Uber Technologies (UBER), Eaton Corporation (ETN), Pfizer (PFE), Spotify (SPOT), Advanced Micro Devices (AMD), Arista Networks (ANET), and Amgen (AMGN).

🟢 November 5: October ADP employment, October ISM Services PMI®, and expected earnings from McDonald's (MCD), Novo Nordisk (NVO), AppLovin (APP), Qualcomm (QCOM), Arm Holdings (ARM), and DoorDash (DASH).

🟢 November 6: Challenger October job cuts and expected earnings from AstraZeneca (AZN), ConocoPhillips (COP), Cummins (CMI), Airbnb (ABNB), and Datadog (DDOG).

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