October 10th Market Overview

Happy Friday

Markets hit all-time highs this morning and here we are closing red -3%.

Four hours after open, Trump canceled his meeting with Xi and threatened massive tariffs over rare earths.

The reality is, China controls 90% of rare earth refining. A monopoly on what goes into our chips and batteries that Mag7 relies on.

Markets were pricing in a trade deal. That's off the table now.

Let's dig in...

Today's Big Picture

1. Trump Cancels Xi Meeting, Threatens Major China Tariffs 
Trump canceled his planned meeting with Xi Jinping and said he's considering "a massive increase in tariffs" on Chinese products. China just tightened rare earth export controls. Foreign companies now need Beijing's permission to export anything with trace amounts. Trump called it holding the world "captive." The Nasdaq was hitting all-time highs when he posted.

2. Tech Stocks Lead Market Reversal on China Exposure
Chip stocks got hammered. Qualcomm dropped after China launched an antimonopoly probe. Companies that manufacture in China or sell there took the biggest hits. This isn't a one-day overreaction.

3. Government Shutdown Enters Day 10, Federal Layoffs Begin 
Federal layoffs started, budget chief Russell Vought confirmed. The Senate failed for the seventh time to pass a funding deal. They're bringing back workers just to release September inflation data on October 24. Social Security needs it for benefit adjustments.

Market Overview

Index Performance

Stock Spotlight

Nvidia $NVDA ( ▼ 3.88% ) 
fell with chip stocks broadly. China is a major manufacturing base and customer.

Broadcom $AVGO ( ▼ 5.2% ) 
and Micron Technology $MU both dropped. Heavy China manufacturing and sales.

Qualcomm $QCOM ( ▼ 7.26% ) 
got hit twice - the tariff threat plus China launching an antimonopoly probe over the company's Autotalks acquisition.

MP Materials $MP ( ▲ 10.6% ) 
shot up after Trump's rare earth comments. It's America's largest rare earth producer with a Pentagon contract.

Big Name Updates

Tesla $TSLA ( ▼ 4.8% ) 
makes about half its cars in Shanghai. Stock fell with the broader selloff.

Amazon $AMZN ( ▼ 4.27% ) 
dropped. Most products on the platform come from third-party sellers sourcing from China.

Apple $AAPL ( ▼ 3.44% ) 
makes most products in China.

Estee Lauder $EL ( ▼ 6.58% ) 
and E.l.f. Beauty $ELF ( ▼ 10.78% ) 
both said tariffs are already hurting their business.

Other Notable Company News

Protagonist Therapeutics $PTGX ( ▲ 29.77% ) 
jumped after WSJ reported Johnson & Johnson $JNJ is in acquisition talks. They already work together on treatments.

Applied Digital $APLD ( ▲ 15.71% ) 
climbed after strong earnings and a new lease with AI cloud company CoreWeave $CRWV.

Venture Global $VG ( ▼ 24.84% ) 
dropped hard after losing an arbitration case against BP.

Levi Strauss $LEVI ( ▼ 12.1% ) 
I fell despite beating earnings. Stock was up big coming into the print.

Bristol Myers Squibb $BMY is acquiring Orbital Therapeutics for $1.5 billion.

Novo Nordisk $NVO ( ▼ 2.97% ) 
agreed Thursday to buy Akero Therapeutics $AKRO ( ▼ 0.29% ) for $5.2 billion.

Delta Air Lines $DAL ( ▼ 3.37% ) 
gave upbeat holiday travel guidance this week. United Airlines reports Wednesday.

Sector Watch

Bond Market

The 10-year auction went fine today - first one since the shutdown started. Yields barely moved on the $39 billion sale, holding near 4.05. The dollar hit its highest level since August. The $22 billion 30-year auction is tomorrow.

Policy Watch

Fed

Fed Governor Christopher Waller said job growth has probably been negative for months. He still wants rate cuts but thinks the Fed needs to go slow. You can't have negative job growth with strong GDP - something has to give. CEOs tell him they've stopped hiring.

Treasury Secretary Scott Bessent narrowed the Fed chair shortlist to five from eleven. Michelle Bowman and Kevin Hassett are still in the running. More interviews coming in the next few weeks.

Jerome Powell speaks Tuesday in Philadelphia.

Government Shutdown

• Day 10, no breakthrough

• Prediction markets say there's now a better than one-in-three chance this goes past 30 days

• Senate returns Tuesday

• Senators swapping healthcare funding ideas behind the scenes

• Longest shutdown ever was 34 days in Trump's first term

Fiscal & Trade

Trump's rare earth threat is a major escalation. China now requires licenses to export anything with rare earths in it - even trace amounts.

Lumber tariffs hit Tuesday. Wood from Canada faces new duties on top of what's already there.

International

Israeli troops withdrawing from Gaza after the ceasefire. Trump visits Monday.

China starts charging U.S. vessels a special port fee Tuesday.

Argentine President Javier Milei meets Trump next week. Washington is backing Argentina's economic overhaul.

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What to Watch

Bank Earnings Could Set Tone for Q3 Season 
Six major banks report Tuesday-Wednesday. Traders will watch net interest margin commentary and loan loss provisions. If regional bank concerns resurface, look for weakness in $KRE. Analysts expect ninth straight quarter of earnings growth for the S&P 500 - that streak is vulnerable if guidance disappoints.

CPI on October 24 - Expect Hot Number 
September inflation data delayed two weeks. Consensus is probably stale given the delay. Oil was elevated in September, shelter costs remain sticky. A hot print could complicate the Fed's October 29 decision.

Trade War Timeline Now Unclear 
Trump canceled the APEC meeting with Xi. That was the next scheduled negotiating window. Watch for any Trump posts about "making progress" or scheduling calls - that's your signal tensions are cooling. Right now, this escalates before it de-escalates.

Shutdown Day 15 Hits October 16 
That's when federal contractors typically miss first payments. If we hit day 20 (October 21), you'll see real economic impact in the data - whenever we get data again.

Thanks for reading 🙂

- John