Mid-Morning Look

Monday, October 27, 2025

U.S. stocks open sharply higher on signs of cooling trade tensions between China/U.S., boosting market sentiment ahead of a busy week dominated by central bank meetings (the FOMC on Wednesday where a 25-bps rate cut is expected) and Mega cap earnings (38% of SPX report this week including AAPL, AMZN, GOOGL, META, MSFT). Note on Friday, the S&P 500 index, Nasdaq 100 and Dow Jones Industrial Average each hit all-time highs on the same day, helped by a cooler-than-expected CPI inflation report Friday, while safe-haven gold and bonds retreated. The S&P 500 had added 1.9% last week to close at a new record high, as small caps made greater gains than large caps as investors embraced riskier assets. Heading into the busiest week of earnings, thus far, 145 (or 29%) companies of the S&P 500 having reported, earnings are up 15.1% on back of revenue growth of 7.8%. While gains have been broad-based this year, the bulk of gains have been focused on the tech sector (XLK +28% YTD), Communications (XLC) +20% (YTD) and Utilities (XLU +20% YTD) all on AI investment/hopes and need for power to run it and today, its again tech, Comm and Consumer Discretionary leading markets higher today. Gold prices are tumbling on more bets on riskier assets while Bitcoin and crypto prices rise.

This weekend, top Chinese and U.S. economic officials hashed out the framework of a trade deal for U.S. President Trump and his Chinese counterpart Xi Jinping to decide on later this week at a meeting in South Korea. Senior U.S. and Chinese officials reported “constructive” progress in weekend trade talks, as the agenda covered export controls, reciprocal tariffs, rare earths and illicit fentanyl trade, along with discussions over TikTok and agricultural purchases. Separately, President Trump on Saturday said he would be increasing the tariff rate on Canadian goods by another 10% after the country drew his anger by airing an ad featuring former President Ronald Reagan talking negatively about tariffs. The tariff rate against Canada is currently at 35%. Trump’s move follows a Friday declaration that he was immediately ending all trade negotiations with Canada.

In foreign markets, Argentina’s stock market soars, boosting US listed Argentina stocks and the peso after Milei scores historic win in Argentina midterms, tightens grip on Congress. The Libertarian President’s party wins 41.5% in Buenos Aires province, increasing lower house seats from 37 to 64. In Asia, huge gains with new records in Japan as The Nikkei Index surged 1,212 points or 2.46% to 50,512, first time above 50K, while the Shanghai Index jumps 46 points to 3,996.

• Rare Earth sector: shares of US rare earth miners declined om signs of improving trade tensions this weekend between the US/China that would pause Chinese rare earths export controls; shares of MP, USAR, METC, CRML among names pulling back early. METC said its Board approved the pursuit of a groundbreaking initiative to establish a national strategic stockpile of rare earth elements and critical minerals at its Brook Mine facility in Wyoming.
• In Leisure & Fitness Products: HOG was downgraded to Underweight at Morgan Stanley and cut tgt to 425 saying Harley sits at the bottom of its leisure framework due to its combination of low pricing power and weak secular trends; LTH was upgraded to Overweight at Morgan Stanley as expects upside to consensus driven by reaccelerating unit growth, pricing power, and alternative rev streams supporting growth & value prop. THO was upgraded to Market Perform at Raymond James saying a recent meeting with management solidified its belief that the company’s current outlook is adequately conservative.
• In Multi Industry/Industrials: HON was upgraded from Sector Perform to Outperform at RBC Capital following a solid Q325 that, in its view, marks the start of the breakup catalyst rich phase heading into the planned 2H26 separation of Aero/Automation. RBC sees growing momentum across core segments, improved visibility on execution, and a credible roadmap toward value unlock. RBC also downgraded ROP to Sector Perform as they see limited relative upside amid investor preference for risk-on, along with uncertainty where AI ultimately lands as an opportunity or threat for Roper’s diversified application software model. TEX was upgraded from Market Perform to Outperform at Raymond James citing outsized risk-adjusted upside potential, with ~-25% total return potential to its $70 price target.

• BBIO +12%; after all primary and secondary interim analysis endpoints in FORTIFY Phase 3 study successfully achieved with well-tolerated safety profile consistent with the Company’s prior studies.
• CADE +5%; after agreeing to be bought by HBAN in an all-stock transaction that values Cadence at $7.4B; CADE shareholders will receive 2.475 shares of HBAN for each share owned, valuing Cadence at $39.77.
• JHG +18%; confirmed it received an offer letter on Sunday from Trian Fund Management and General Catalyst Group to buy the remainder of the asset management firm that Trian doesn’t already own for $46 a share. https://tinyurl.com/mpa5v35b
• KDP +5%; Q3 results were better than expected on sales rising 11% y/y to at $4.31B vs. est. $4.16B and raised its FY sales growth view (constant currency) to high-single-digit range vs a mid-single-digit growth outlook previously.
• QCOM +18%; after announced the launch of its next-generation AI inference-optimized solutions for data centers: the Qualcomm AI200 and AI250 chip-based accelerator cards, and racks.
• PUMP +15%; after signs long-term 60-megawatt power contract for hyperscaler data center, leveraging hybrid energy storage technology/said deployment and operations slated to begin in Q2’26.
• RNA +42%; as NVS said it will acquire the company in a $12B all-cash transaction, as shareholders will receive $72 a share in cash, a 46% premium to Friday’s closing price, strengthening its portfolio of treatments for rare muscle disorders.
• ZBIO +12%; shares jump after saying it received positive results from the phase 2 Moonstone trial of obexelimab for treatment of relapsing multiple sclerosis, or RMS, meeting the trial’s primary endpoint.

• MP -8%; along with declines in other rare earth names UAMY, USAR, METC, CRML on signs of improving trade tensions this weekend between the US/China that would pause Chinese rare earths export controls
• NEM -6%; the sector declined as gold, silver prices ease on stronger dollar, US-China trade deal hopes with shares of miners NEM, AG, CDE, B, AEM, PAAS pulling back.
• NTLA -43%; after saying it has temporarily stopped dosing and screening patients in two late-stage studies of its gene-editing treatment nex-z for a heart condition after a patient developed liver toxicity; said the case involved spikes in liver enzymes and higher bilirubin in a participant.
• OGN -21%; shares fell after CEO Kevin Ali said he will resign from his role, after an internal investigation into sales of its Nexplanon contraceptive implant to wholesalers pointed to “improper” practices following an audit committee investigation.
• ROP -1%; RBC downgraded to Sector Perform as they see limited relative upside amid investor preference for risk-on, along with uncertainty where AI ultimately lands as an opportunity or threat for Roper’s diversified application software model