S&P 500 Rebounds on Favorable US-China Tariff War News

The S&P 500 (Index: SPX) continued bouncing around on headlines related to the U.S. and China’s trade actions against each other. This week, the index rose 1.7% as investors perceived the trade news to be more favorable, as the S& 500 rose to close out the trading week ending Friday, 17 October 2025 at 6,664.01.

Meanwhile, Federal Reserve officials gave stronger indications they will act to cut the Federal Funds Rate at the end of the month. The CME Group’s FedWatch Tool projects a greater than 99% probability of two more quarter point cuts in 2025, coming on 29 October (2025-Q4) and 10 December (2025-Q4). In 2026, the FedWatch tool forecasts a slower pace for additional rate cuts, with better than 50% probabilities for quarter point rate cuts on 28 January (2026-Q1) and then not again until 17 June (2026-Q2).

The main focal point for forward-looking investors remains the Fed’s plans to cut rates in 2026. The latest update of the alternative futures chart reveals the S&P 500′s trajectory remains consistent with the dividend futures-based model projections for where the S&P 500 would be expected to be when investors fix their attention on 2026-Q2 as they set current day stock prices, though the trajectory is falling in the lower half of the expected range for that investing time horizon:

Here are the market moving headlines investors absorbed throughout the trading week.

Monday, 13 October 2025

• Signs and portents for the U.S. economy:

• Trump downplays rift with China, says U.S. ‘wants to help’
• Oil settles higher as US, China try to de-escalate trade tensions

• OPEC points to smaller 2026 oil supply deficit as OPEC+ pumps more

US Treasury chief says government shutdown is hitting economy

Amazon to hire 250,000 workers during holiday season for third straight year

Fed minions say they expect to cut rates again and also that they’ll do something about inflation if there is any:

• Fed’s Paulson anticipates more rate cuts to support job market
• Fed’s Paulson says Fed would react to burst of inflation

Growth signs, tariff war developing in China:

• China ‘not afraid of trade war,’ accuses U.S. of ‘double standard’ for rare earths retaliation
• China’s exports top forecast but fresh US trade spat raises risks to outlook
• China’s car sales pick up speed in ‘Golden September’

Wall Street rebounds as Trump softens rhetoric on China exports control tensions

• Wall Street ends sharply higher on Trump China comments; Broadcom surges

• Broadcom surges after OpenAI deal for 10 gigawatts of custom AI accelerators

Tuesday, 14 October 2025

• Signs and portents for the U.S. economy:

• US banking giants buoyed by dealmaking, but warn of asset price bubbles
• Oil settles down 1.5% on US-China trade tensions, IEA warning of glut

• US oil futures backwardation narrows to 20-month low on mounting fears of a glut

Oil executives flag increased costs from Trump’s tariffs

• World oil market to see huge glut in 2026, IEA says
• Oil bosses expect market surplus to shrink over time

Fed minions set out case for more rate cuts, end of quantitative tightening policies:

• Fed’s Powell says economy may be on firmer footing, but job market weak

• Fed’s Powell says the end of balance sheet drawdown process may be nearing
• Fed’s Powell addresses economy pulled between risks to growth, jobs and prices

Fed’s Collins still favors additional rate cuts to aid job market

Fed’s Bowman expects two more interest rate cuts this year

Bigger trouble, stimulus developing in China:

• China is making it harder to get rare earth magnet export licenses, sources say
• US, China roll out tit-for-tat port fees, threatening more turmoil at sea
• US tariffs on China on Nov 1 depend on Beijing’s actions, USTR Greer tells CNBC
• Trump mulls ending some trade ties with China, including in relation to cooking oil

ECB minions looking to US for leadership as bigger trade trouble develops in Eurozone:

• World needs U.S. engagement for financial stability, ECB’s Villeroy says
• China’s rare earth curbs put Europe’s auto industry at risk, Italian lobby says
• EU seeks US alliance to counter China rare earth crackdown

S&P 500, Nasdaq end lower amid U.S.-China trade war concerns

• Wall Street ends mixed; banks rally on upbeat results
• Gold rises to another record, and traders see potential to rise as high as $5,000/oz

Wednesday, 15 October 2025

• Signs and portents for the U.S. economy:

• Oil rises with US-China trade tensions in focus
• Trump administration to set price floors to combat China’s market manipulation
• US economic activity little changed, employment stable in recent weeks, Fed says
• US retail sales likely rose in September; higher-income consumers drive growth

Fed minions see early sign of liquidity problems, room for rate cuts:

• US banks tap Fed repo facility as overnight rates climb, signaling funding strain
• Fed’s Collins still favors additional rate cuts to aid job market

Bigger trouble, stimulus developing in China:

• Deflationary pressures persist in China on weak demand, overcapacity
• China to keep its ‘all about production’ economic playbook as rivalry with US intensifies

ECB minions say they need to see bigger shocks before changing Eurozone interest rates again:

• ECB should only cut rates further if new shocks hit, Dolenc says

S&P 500, Nasdaq eke out gains as earnings lift markets, gold reaches $4.2K

• S&P 500 ends higher after strong bank earnings, chip stocks rally

Thursday, 16 October 2025

• Signs and portents for the U.S. economy:

• Oil drops 1%, settles at 5-month lows as Trump-Putin summit looms
• US homebuilder sentiment hits 6-month high; economy uncertainty clouds housing outlook

Fed minions getting on board with more rate cuts, worry about China:

• Fed’s Waller on board for an October rate cut, as Miran again presses for aggressive easing

• Fed’s Waller: Available data show ongoing labor weakness, bolstering rate cut case

Fed’s Miran: Growth next year could hinge on how U.S.-China tensions are resolved – Fox Business

• Fed policymakers’ focus on tariffs makes central bank seem political: Miran

Fed’s Barkin: Consumers are spending, but not as flush as in pandemic years

Bigger trouble, stimulus developing in China:

• China’s retailers extend Singles’ Day to five weeks to revive spending

BOJ minions want more data to support plans to hike rates:

• Bank of Japan chief signals need for more data in deciding October move
• Hawkish Bank of Japan policymaker calls for more rate hikes

ECB minions say they shouldn’t act to change rates when inflation data changes by small amounts:

• ECB must not overengineer policy on small inflation deviations, Kocher says

Wall Street slides on trade war concerns, bank loans reports, ongoing U.S. shutdown

• Wall Street ends down; Zions sparks worries about regional banks

• Jefferies, Zions, Western Alliance sink, leading regional bank stocks down on credit risk concern

Gold hits another record with bank worries in focus alongside trade, rate cuts

Friday, 17 October 2025

• Signs and portents for the U.S. economy:

• Trump says 100% tariffs on China not sustainable, still plans to meet Xi
• Oil set for weekly loss on uncertainty over global supply outlook

Fed minions thinking economy may not be slowing as much as they think, still lining up to cut rates again:

• Fed’s Kashkari: Economy may not be slowing as much as we think
• Fed’s Musalem leans toward supporting October interest rate cut

Bigger trouble, stimulus developing in China:

• Exclusive: WTO chief urges US, China to de-escalate trade war, or risk long-term hit to global growth
• China expected to keep benchmark lending rates steady despite renewed Sino-US tensions
• In China, global companies struggle as home-grown brands steal thunder

Japan banks going crypto, BOJ minions say they’ll hike Japan’s interest rates if their forecasts are right:

• Japan’s top banks to jointly issue stablecoin, Nikkei says
• BOJ to raise rates if economy aligns with forecasts, deputy governor says
• Japan’s core inflation likely re-accelerated in September: Reuters poll

ECB minions say they’re done with Eurozone interest rate cuts:

• More ECB rate cuts increasingly unlikely, Wunsch says

Wall Street overcomes worries on regional banks’ health, government shutdown carries on

• Wall Street ends higher as investors digest Trump trade comments
• Wall Street banks regain ground after global rout on credit worries

The Atlanta Fed’s GDPNow tool projection of real GDP growth in the U.S. during the current quarter of 2025-Q3 held steady +3.8% with data reports on hold because of the Senate Democrats’ ongoing refusal to allow a vote to fund government operations.

Image credit: Microsoft Copilot Designer. Prompt: “An editorial cartoon of a Wall Street bull and bear watching a tennis match between the US and China on a court that says ‘TARIFF WAR’”.