2025-10-27 21:05
publication
2025-10-27 21:05
Hopes of reaching a trade agreement between the US and China have pushed New York indexes to new all-time highs. Traditionally, the prices of shares of large technology concerns related to the AI mania have risen in price.
The Dow Jones industrial average gained 0.71% on Monday and reached 47,544.59 points. This is a record high closing price. The same as in the case of the S&P500 index, which increased by 1.23% and reached the level of 6,875.15 points. At this moment, the S&P 500 is trading 42% lower than during the height of the April panic related to President Trump's tariff policy.
The Nasdaq Coposite rose 1.85% and set a new all-time high of 23,635.27 points. This is over 22% higher than at the beginning of the year and 60% above the April low. Therefore, the market is already significantly “stretched” – both in terms of the size of this year's increase and share valuations in relation to the profits attributable to them.
Monday's euphoria had its origins in weekend signals coming from Washington. US President Donald Trump is expected to meet Chinese leader Xi Jinping on Thursday, October 30 in South Korea. On Sunday, October 26, preparatory talks between the US and Chinese delegations took place in Malaysia, which, according to US Finance Minister Scott Bessent, were to create a “very good framework” for concluding a trade agreement during the meeting of the leaders of both powers.
– I think we will conclude an agreement with China – said the US president. We will meet them later in China and we will meet them in the US, in Washington or Mar-a-Lago, Donald Trump added.
It is significant that, according to investors, the biggest beneficiaries of a possible “deal” with the Chinese will be large technological monopolies. At least that's how the market reacted on Monday. Shares of Nvidia went up by 2.8%, Broadcom by over 2%, Palantir by 2.5%, Meta by 1.7%, and Alphabet (i.e. Google) by 3.6%.
But the biggest star of Monday's session were Qualcomm's shares, which gained over 11%. The chipmaker revealed its two new models that are intended to serve AI algorithms. The AI200 and AI250 chips are expected to enter the market in 2026 and 2027, respectively, promising to increase the Californian company's revenues. This market reaction also confirms that the mania for investing in AI is still alive and does not fade away even for a moment. It was a bit similar to the situation with Internet companies a quarter of a century ago.
We are now in peak reporting season on Wall Street. The largest listed companies publish their results for the third quarter. This week the results will be shared by, among others: UPS and Visa (on Tuesday), Alphabet and Microsoft (on Wednesday), Amazon and Apple (on Thursday), and Chevron and Exxon (on Friday). FactSet analysts estimate that company profits attributable to the S&P500 index (i.e. EPS) will be 9.2% higher than last year. Over the next four quarters, the expected EPS for the S&P500 index reaches almost USD 300. At the current level of this index, this implies a p/p ratio of 22.9. That's one of the highest readings in modern history.
K.K
