The three major U.S. indices posted strong rebounds on Monday as President Trump hinted he would not implement his threatened "significant tariff increases," while Vice President Vance sent signals of hope for negotiations. Tim Kelleher, Head of FX Sales at Commonwealth Bank of Australia, stated: "The market is indeed somewhat nervous. Looking at the U.S.-China situation, Trump appears to be playing the 'TACO' (Trump Always Chickens Out) playbook again, softening his tone." Earlier, news of OpenAI's partnership with Broadcom (AVGO.US) to develop custom chips and networking equipment injected fresh optimism into the market. "As long as the AI capital expenditure boom continues, the stock market can maintain its strength," said Tom Essaye of Sevens Report. However, he warned: "If the market begins to doubt AI's stimulative effect on the overall economy and market, the decline will be swift and painful." The rapid rise in tech stocks drove the S&P 500 to new highs, but also pushed up valuations, raising concerns about a potential market bubble. John Belton, fund manager at Gabelli, commented: "There are indeed some similarities, but calling it a 'bubble' now would be oversimplifying. It's currently difficult to definitively say a valuation bubble exists. There is indeed some localized overheating, but it's mainly concentrated in individual sectors or market fringe segments."
**U.S. Stocks** At the close, the Dow Jones rose 587.98 points or 1.29% to 46,067.58; the Nasdaq gained 490.178 points or 2.21% to 22,694.608; the S&P 500 advanced 102.21 points or 1.56% to 6,654.72. Navitas Semiconductor (NVTS.US) extended gains to 42% in after-hours trading after the company announced support for NVIDIA's AI platform.
**European Stocks** Germany's DAX 30 rose 139.27 points or 0.57% to 24,406.07; the UK's FTSE 100 gained 14.38 points or 0.15% to 9,441.85; France's CAC 40 advanced 16.26 points or 0.21% to 7,934.26; the Euro Stoxx 50 climbed 37.73 points or 0.68% to 5,569.05; Spain's IBEX 35 rose 51.36 points or 0.33% to 15,537.56; Italy's FTSE MIB gained 126.50 points or 0.30% to 42,174.00.
**Crude Oil** November-delivery light crude futures on the New York Mercantile Exchange rose 59 cents or 1.0% to $59.49 per barrel; December-delivery Brent crude futures advanced 59 cents or 0.94% to $63.32 per barrel.
**Cryptocurrencies** Bitcoin gained 0.71% to $115,909; Ethereum surged over 2.6% to $4,270.14.
**U.S. Dollar Index** The dollar index, measuring the greenback against six major currencies, rose 0.3% to close at 99.274 in late New York trading. By the close of New York currency markets, 1 euro traded for 1.1568 dollars, down from 1.1609 dollars in the previous session; 1 pound bought 1.3334 dollars, down from 1.3346 dollars; 1 dollar bought 152.29 yen, up from 151.72 yen; 1 dollar bought 0.8041 Swiss francs, up from 0.8013 francs; 1 dollar bought 1.4037 Canadian dollars, up from 1.4000 dollars; 1 dollar bought 9.5055 Swedish kronor, down from 9.5216 kronor.
**Precious Metals** Spot gold broke through $4,111, rising over 2% intraday; spot silver surged past $52.
**Macro News** Fed's Paulson Hints at Support for Two More 25bp Rate Cuts This Year. Philadelphia Fed President Paulson, a 2026 FOMC voting member, suggested she favors two more 25 basis point rate cuts this year, arguing that monetary policy should ignore the impact of tariffs on consumer price increases when being formulated. Paulson stated: "For me, the key is that I don't see the conditions that could turn tariff-induced price increases into persistent inflation—particularly regarding the labor market." Paulson said the policymakers' decision to cut rates by 25 basis points last month was "reasonable." With monetary policy moderately tight, she advocates easing policy in line with the Fed's latest Summary of Economic Projections, whose median forecasts support two more 25bp cuts before year-end. She added that if the economy develops as expected, monetary policy adjustments this year and next will be sufficient to bring labor market conditions close to full employment.
Gaza Ceasefire Agreement Signed in Egypt. On October 13 local time, the United States, Egypt, Qatar, and Turkey signed documents regarding a Gaza ceasefire agreement in Sharm el-Sheikh, Egypt. The Sharm el-Sheikh "Peace Summit" hosted by Egypt opened that evening, co-chaired by Egyptian President Sisi and U.S. President Trump. Israeli Prime Minister Netanyahu confirmed participation at the last minute before the meeting but later canceled his trip. The Palestinian Islamic Resistance Movement (Hamas) did not send representatives to the conference.
Morgan Stanley: Consumer Goods Companies' Q3 Organic Sales Expected to Remain Weak. Morgan Stanley analysts stated in a report that due to continued weakness in the U.S. market and international market slowdown, consumer goods industry Q3 organic sales are expected to show weakness again. "We expect Q3 organic sales growth to remain weak, a trend that may continue into Q4," the analysts wrote. They anticipate modest improvement by 2026, partly driven by tariff-related price increases, but overall growth may still fall below long-term trend levels and general market expectations. The report also warned that if tariff-induced price increases further squeeze spending by middle and lower-income consumers, macro risks could intensify next year.
Standard Chartered: Further Rate Cuts in 2026 May Be Difficult if U.S. Economic Momentum Persists. Standard Chartered analysts Nicholas Chia and Steve Englander stated in a report that while the Fed is expected to continue cutting rates for the remainder of 2025, the possibility of further cuts in 2026 will diminish if U.S. economic momentum remains strong. The analysts noted that from a medium to long-term perspective, this scenario could push up the dollar and Treasury yields. "We believe market expectations for about 63bp of Fed cuts in 2026 may be gradually priced out, especially if U.S. economic momentum continues and productivity growth exceeds expectations, which would drive yields and the dollar higher."
Stifel: U.S. Consumers Still Consider Dining Out Too Expensive, Restaurant Industry Weakness May Persist. Stifel analysts indicated that the U.S. restaurant industry's struggles this year show no signs of relief, despite companies launching numerous promotional campaigns, consumers still consider dining out prices too high. According to a Stifel survey, the proportion of consumers considering restaurants "too expensive" has increased since the beginning of the year, with this trend particularly impacting fast-food brands. Analysts noted that historically, during economic downturns, restaurant companies' earnings expectation downgrades typically last about 28 months, while current downward revisions to 2025 and 2026 earnings forecasts have persisted for 16 months, "suggesting many companies may still face further downside risks."
**Individual Stock News** Microsoft (MSFT.US) Faces Antitrust Class Action Lawsuit Over ChatGPT Pricing. Microsoft is facing a new consumer lawsuit with plaintiffs alleging the tech giant illegally inflated generative AI prices through secret agreements with ChatGPT developer OpenAI. The class action lawsuit filed in San Francisco federal court accuses Microsoft of using exclusive cloud computing agreements with OpenAI to restrict the supply of computing resources needed to run ChatGPT. Microsoft has invested over $13 billion in OpenAI to date. The complaint alleges that Microsoft's agreements reached during OpenAI's early development stage violated federal antitrust laws, stifled market competition, and artificially inflated ChatGPT subscription prices while harming product quality for millions of AI platform users.
MicroStrategy (MSTR.US) Invests Additional $27 Million in Bitcoin After New Highs. Since Bitcoin reached record highs earlier this month, MicroStrategy, the Bitcoin reserve company founded by Michael Saylor, has increased its Bitcoin holdings again, with total holdings value exceeding $73 billion. Previously, the company had gradually reduced Bitcoin purchases for several months. As market skepticism about crypto treasury companies intensified, MicroStrategy's stock price notably lagged behind Bitcoin's gains when the cryptocurrency soared to a historic high of $126,000 this month. MicroStrategy announced in a Monday press release that it purchased an additional 220 Bitcoin at an average price of $123,561 per coin, for a total investment of $27 million. This represents the highest unit price the company has paid to date. The purchase brings MicroStrategy's total Bitcoin holdings to 640,250 coins, representing approximately 3% of the nearly 20 million Bitcoin currently in circulation.
Oracle (ORCL.US) CEO: OpenAI Capable of Handling $60 Billion Annual Cloud Infrastructure Costs. Oracle CEO Clay Magouyrk expressed confidence in OpenAI's ability to pay for the massive cloud infrastructure services it consumes. Speaking at Oracle's AI World Conference on Monday, Magouyrk stated that OpenAI "certainly" can afford $60 billion for a year's worth of cloud resources. In July, OpenAI reached a five-year agreement with Oracle worth over $300 billion. Magouyrk said: "Look at the speed of their growth, you know, almost a billion users. That's unheard of."
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