US Stocks Poised To Open Higher As Trump-Xi Meeting Fuels Market Optimism: Retail Turns Contrarian

• A massive $16 billion tax provision related to President Donald Trump’s tax bill weighed on Meta Platform’s bottom line.
• Following a meeting with Chinese President Xi Jinping, Trump said he would cut fentanyl tariffs on China, and a rare-earth deal has been reached.
• Apple and Amazon headline the earnings news flow for Thursday.

U.S. stocks are set to open Thursday’s session on a positive note following a market pause in the previous session, as optimism about President Donald Trump’s meeting with Chinese counterpart Xi Jinping managed to outweigh apprehensions about the mixed bag of big tech earnings.

Trump told the press that duties on fentanyl imports from China have been slashed to 10% and a rare earths deal has been reached with the Asian country.

However, a massive $16 billion tax provision related to Trump’s tax bill weighed on Meta Platform’s (META) bottom line, sending its stock sharply lower in after-hours trading, and Microsoft’s (MSFT) soft guidance dented investor sentiment. On the other hand, Alphabet, Inc. (GOOGL) (GOOG) defied the big-tech sell-off, with strong quarterly results, underpinned by robust Search and Cloud revenue.

How Futures Are Trading

As of 1:30 a.m. ET on Thursday, the Nasdaq 100, S&P 500, and Dow futures were up between 0.05% and 0.15%, recouping some of the early losses, while the Russell 2000 futures climbed 0.24%.

On Stocktwits, however, retail sentiment toward the SPDR S&P 500 ETF (SPY), an exchange-traded fund that tracks the S&P 500 Index, turned ‘bearish’ early Thursday, and that toward the Invesco QQQ Trust (QQQ) ETF, which tracks the Nasdaq 100 Index, worsened to ‘extremely bearish’ from ‘neutral’ a day ago. The message volume on both streams stood at ‘high’ levels.

Posting on the QQQ stream, a bearish user raised the specter of more losses.

How Markets Traded Wednesday

Stocks closed Wednesday’s session on a mixed note, as the market digested the Fed decision and Chair Jerome Powell’s comments at the press conference that followed. The Nasdaq Composite and the Nasdaq 100 indices recovered from mid-session weakness triggered by Powell's hint of a potential rate pause in December and ended moderately higher, setting fresh records.

Market heavyweight Nvidia (NVDA) rallied nearly 3% to a fresh peak, topping $5 trillion in market capitalization amid ongoing optimism about the artificial intelligence (AI) opportunity.

On the other hand, the S&P 500 Index ended flat, with a negative bias, and the Dow Jones Industrial Average and the Russell 2000 Index ended lower. 

Key Catalysts To Watch Out For

On the economic front, Fed Vice Chair for Supervision Michelle Bowman is scheduled to speak at 9:55 a.m. ET.

Apple, Inc. (AAPL) and Amazon (AMZN) headline the earnings news flow for Thursday, although both are due to report after the market closes. The other key earnings reports for the day include those from Bristol-Myers Squibb (BMY), Cardinal Health (CAH), Comcast (CMCSA), Eli Lilly (LLY), Fox Corp. (FOXA), Merck (MRK), Roblox (RBLX), Sirius XM (SIRI), Mastercard (MA), Atlassian (TEAM), BJ Restaurants (BJRI), Cloudflare (NET), Coinbase Global (COIN), First Solar (FSLR), Monolithic Power (MPWR), Reddit (RDDT), Roku (ROKU), Twilio (TWLO), Western Digital (WDC) and Zillow (ZG).

How Other Markets Fared

Crude oil futures, which staged a modest recovery on Wednesday, have reversed course early Thursday. Gold futures slipped and the 10-year U.S. Treasury note yield rose further after spiking above the 4% mark after Powell’s hawkish comment and the central bank’s decision to end quantitative tightening in December. The U.S. dollar ticked down against its major counterparts. Most major Asian markets traded lower after the Fed decision and the mixed U.S. tech earnings.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Read Next: Fed To End QT, Citing Ample Reserves, Liquidity: What Early Wind-Down Means For Market?

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