Dow futures soar over 260 points on US-China deal: 5 things to know before Wall Street opens

US equity futures and global markets surged, with Dow futures up 0.5%, driven by optimism over a preliminary US-China trade deal that includes tariff suspensions and delayed critical mineral export controls. This positive momentum was reinforced by robust Q3 earnings, where S&P 500 growth reached 9.2% and 87% of companies beat EPS forecasts, alongside expectations for an imminent Federal Reserve rate cut. While rare earth mining stocks declined due to the delayed Chinese export restrictions, the ongoing 27-day US government shutdown was largely overshadowed by these significant market tailwinds.

Analysis

Dow futures surged 0.5% on Monday, driven by significant optimism surrounding a preliminary US-China trade agreement that includes tariff suspensions and delayed critical mineral export controls. This positive sentiment, coupled with anticipation of an imminent Federal Reserve interest rate cut, fueled a broad global market rally, with Japan's Nikkei and South Korea's Kospi reaching new record highs. The impending Trump-Xi summit on October 30 is expected to finalize this framework, averting planned 100% tariffs.

The Q3 2025 earnings season is proving robust, with S&P 500 earnings growth at 9.2%, surpassing initial estimates of 7.9%, and revenue growth at 7%, the strongest since Q3 2022. Approximately 87% of reporting firms have beaten EPS forecasts, indicating strong corporate performance. Key tech companies like Microsoft, Apple, and Amazon are scheduled to report mid-week, potentially sustaining this positive momentum.

Despite the overall bullish market, specific sectors are experiencing divergent impacts; US-listed rare earth mining companies, including Critical Metals (-8%) and USA Rare Earth (-7.4%), declined sharply due to the delay in China's critical mineral export controls. Concurrently, the ongoing 27-day US government shutdown, threatening food aid and ACA enrollment, remains an unresolved domestic risk, though it is currently overshadowed by the positive macroeconomic and corporate news.

Key Decisions for Investors

• Investors should consider maintaining exposure to broad market indices given the strong macroeconomic tailwinds from the US-China trade deal and anticipated Fed rate cut.
• Monitor upcoming Q3 earnings reports from major technology firms for continued corporate strength, as current S&P 500 earnings growth and beat rates are robust.
• Exercise caution or re-evaluate positions in sectors directly impacted by specific trade deal clauses, such as rare earth mining companies, which saw significant declines.
• Remain cognizant of the unresolved US government shutdown as a potential domestic risk that could re-emerge as a market concern if prolonged.