Finance

Wall Street Hits Record Highs: How Strong Earnings, Fed Moves, and Trump-Xi Talks Are Shaping the Rally

Stocks hit record highs, fueled by strong earnings, Fed rate cut hopes, and positive US-China trade talks.

byAndres Castro

October 28, 2025, 4:33 PM

A close-up of a black Wall Street street sign attached to a pole, with a marble building facade blurred.

The iconic Wall Street sign in New York's financial district. By MDL.

Executive Summary

U.S. stock markets, including the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite, all reached fresh record highs on Tuesday, October 28, 2025.

The market rally was significantly driven by robust corporate earnings reports from major companies and increasing investor optimism for Federal Reserve interest rate cuts.

Positive developments in U.S.-China trade relations, with President Donald Trump and Xi Jinping preparing for a meeting and agreeing on a trade framework, further bolstered market sentiment.

The Story So Far

U.S. stock markets are experiencing record highs driven by a combination of robust corporate earnings reports surpassing expectations, increasing investor optimism for Federal Reserve interest rate cuts amidst signs of easing inflation, and positive developments in U.S.-China trade relations, highlighted by the anticipated meeting between President Donald Trump and China’s Xi Jinping to finalize a new trade framework.

Why This Matters

U.S. stock markets reaching fresh record highs, propelled by robust corporate earnings and the strong anticipation of Federal Reserve interest rate cuts, signals widespread investor confidence in a resilient economic outlook despite minor dips in consumer sentiment. Furthermore, the reported progress in U.S.-China trade relations, including an upcoming meeting between Donald Trump and Xi Jinping and a new trade framework, is poised to reduce geopolitical uncertainty and could bolster global economic stability and corporate profitability across key sectors.

Who Thinks What?

Investors and market participants are optimistic about the U.S. stock market rally, driven by robust corporate earnings, the anticipation of Federal Reserve interest rate cuts, and positive developments in U.S.-China trade relations.

President Donald Trump and China’s Xi Jinping are contributing to market optimism by preparing for a meeting and reportedly agreeing on a trade framework for key sectors.

Adam Turnquist of LPL Financial attributes the market rally to strong fundamentals, easing inflation, and rate-cut expectations, noting that the news of the Trump-Xi meeting further bolstered the positive tone.

U.S. stock markets reached fresh record highs on Tuesday, October 28, 2025, driven by a combination of robust corporate earnings reports, increasing optimism for Federal Reserve interest rate cuts, and positive developments in U.S.-China trade relations. The Dow Jones Industrial Average climbed 1%, the S&P 500 gained 0.8%, and the Nasdaq Composite surged 1.1%, all closing at new all-time peaks.

Corporate Earnings Fuel Rally

Several major companies reported stronger-than-expected third-quarter results, fueling investor confidence. UPS saw its shares rise 7%, while Wayfair soared 21% after surpassing analyst forecasts. PayPal’s stock jumped 10% following its earnings release and the announcement of a partnership with OpenAI to integrate its digital wallet into ChatGPT.

Technology giants also contributed significantly to the market’s ascent, with Apple and Microsoft each surpassing a $4 trillion market capitalization. These valuations place them among the world’s most valuable companies, trailing only Nvidia, which holds a $4.6 trillion valuation.

Monetary Policy and Economic Indicators

The broader market rally was further supported by signs of easing inflation and investor anticipation of future interest rate adjustments by the Federal Reserve. The Fed commenced a two-day policy meeting on Tuesday, with market participants expecting Chair Jerome Powell to signal another rate cut before the end of the year.

Economic indicators showed consumer confidence slightly dipped in October to 94.6 from 95.6, but remained generally stable. The ongoing government data blackout due to a shutdown has led traders to seek other signals regarding the economy’s direction.

U.S.-China Trade Optimism

Market sentiment also improved following news that President Donald Trump and China’s Xi Jinping were preparing for a meeting later in the week. Both leaders reportedly agreed on a trade framework encompassing key sectors such as rare earths, soybeans, and TikTok, adding to the bullish outlook. Adam Turnquist of LPL Financial noted that the rally reflected strong fundamentals, easing inflation, and rate-cut expectations, with the Trump-Xi meeting news further bolstering the positive tone.

Sectoral and Company Movements

While major indexes soared, the Russell 2000, which tracks small-cap stocks, lagged, experiencing a 0.2% dip. In other corporate news, Jefferies upgraded Nokia to “buy,” citing strong demand for AI data-center technology following its Infinera merger, contributing to a 45% rise in Nokia’s shares this year.

Other companies contributing to the rally included Qualcomm, which surged after unveiling two new AI chips for data centers, and Ford Motor, which posted strong quarterly earnings driven by sales growth in electric and hybrid models. Keurig Dr Pepper also reported higher-than-expected earnings.

Market Outlook

The current market momentum, characterized by robust corporate performance, easing inflationary pressures, and the prospect of supportive monetary policy and improved trade relations, indicates continued investor optimism. However, market observers suggest vigilance regarding upcoming earnings, Federal Reserve decisions, and global trade developments.