Stock Market Set to Break Out as U.S.-China Optimism and Stunning Tech Earnings Ahead — What to Expect and More

As mentioned on Tuesday, the stock market is still struggling with a potential double-top pattern, as investors look for further clues amid Tesla’s and Netflix’s not-so-blockbuster earnings to determine whether the next move will be bullish or corrective. Yet, the worry may begin to fade. So far, earnings results have reinforced the strength of the economy, the upcoming U.S.-China talks appear promising, and more importantly, next week’s big tech earnings and more could invite the bull party to continue. Here’s why.

Let’s start with the technicals. The S&P 500 and Nasdaq 100 remain below their October 9 highs, forming a double-top structure that could either break out or correct. However, the Dow Jones Industrial Average refreshed its record high on Tuesday, supported by strong third-quarter results from traditional sectors — including 3M, JPMorgan, American Express, and Coca-Cola. These solid performances from old-economy companies reaffirm the economy’s resilience despite Trump’s tariff uncertainty and the absence of Fed easing. Fundamentally, a strong economy could sustain the bull market unless Trump delivers another surprise shock.

Even though Tesla reported weaker profitability and delayed guidance for autonomous driving and Optimus, its stock rebounded from an initial 5% drop to a 2% gain on Thursday as investors continued to buy into Musk’s long-term vision. This resilient sentiment, supported by a firm economic backdrop, could further fuel the rally.

The next round of U.S.-China trade talks could also capture investor attention. Vice Premier He Lifeng is scheduled to meet U.S. officials in Kuala Lumpur from October 24 to 27, paving the way for President Xi and Trump to potentially meet at the Asia-Pacific Economic Cooperation Summit in South Korea. Although Trump previously warned of imposing another 100% tariff and restricting key software exports — which triggered the October 9 sell-off that indices have yet to fully recover from — investors should interpret this as a bargaining tactic. Similar strategies have played out before, often leading to eventual compromises once both sides meet face-to-face.

Currently, the U.S. holds leverage on tariffs and tech intellectual property, while China possesses rare earths, TikTok, and substantial soybean demand. This near-equivalent bargaining power could lead to a more balanced dialogue. Trump’s “TACO” strategy and China’s willingness to talk might foster a warmer atmosphere. However, investors should not expect a major breakthrough or escalation; instead, both sides may aim to lay the groundwork for a broader trade agreement. For markets, “no news” could actually be the best outcome, as stability in U.S.-China relations tends to reduce geopolitical tension and boost risk appetite.

The real spotlight, however, is on next week’s tech earnings, with Microsoft, Meta, Google, Amazon, and Apple all set to report sequentially. The focus will be on how artificial intelligence continues to shape these giants’ core businesses and drive growth. The AI momentum, grounded in a robust economy, justifies the enormous spending spree. Investors shouldn’t fear an AI slowdown, as companies continue to invest heavily in generative tools like chatbots and intelligent agents, supporting cloud providers such as Microsoft and Google — aided by ChatGPT and Gemini. Meanwhile, Apple is expected to deliver impressive results, with iPhone sales exceeding expectations and the upcoming iPhone 17 series showing strong demand in China. Collectively, these developments could bring another wave of upside surprises for tech stocks, reinforcing the bullish cycle.

It’s also worth noting the Fed’s October meeting next week, where Powell is expected to cut rates by another 25 basis points even amid limited economic data due to the ongoing government shutdown. Tariff-driven inflation appears manageable, and the focus has shifted more toward the labor market. Continued easing through the rest of the year could further enhance investor sentiment.

In summary, the potential technical breakout, improving U.S.-China outlook, exciting upcoming tech earnings, and expected Fed easing all provide solid ground for the bull run to extend. Enjoy the ride while it lasts.