Morning Brief
US–China truce, Fed hawkish, Big Tech spending surge
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US stocks edge lower after a busy night of earnings and policy headlines. President Trump and China’s Xi Jinping agreed to a one-year trade truce at their meeting in South Korea, cutting fentanyl-related tariffs in half while China resumes rare-earth exports and soybean purchases worth 12 million metric tons — about 10% of the U.S. annual crop. The deal pauses further escalation but keeps the average U.S. tariff rate near 47%. Markets reacted coolly as investors stayed focused on Big Tech earnings and Fed policy. Alphabet (GOOG) jumped after a surge in AI-driven cloud revenue, while Meta (META) fell as its CapEx outlook ballooned to up to $72B for 2025. Microsoft (MSFT) rose after CFO Amy Hood said demand remains “capacity constrained,” even after billions in AI infrastructure spend. Meanwhile, Fed Chair Jerome Powell signaled caution after delivering another 25 bp rate cut, warning that “a further reduction in December is not a foregone conclusion.” The market slashed odds of another cut to 60% as internal Fed divisions widen.
Takeaways:
US and China reach one-year trade truce; tariffs cut on fentanyl goods, soybean purchases resume
Fed cuts rates but warns no preset path; December cut odds fall sharply
Big Tech CapEx explodes 89% year-over-year — AI spending dominates Q3
Alphabet rallies on strong cloud results; Meta sinks on CapEx surge
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