CNBC Daily Open: Hopes of a U.S.-China deal spark a rally

The mere prospect of a U.S.-China trade deal is enough to send markets higher.

On Monday stateside, the S&P 500, Dow Jones Industrial Average and Nasdaq Composite closed at record highs — with the broader market index breaking past the 6,800 level for the first time.

And that’s before an agreement has been signed officially.

“A lot of the forecasts for technology have been without the benefit of China, so once you can add China back into the equation, that would probably be fairly optimistic for the markets,” Sam Stovall, chief investment strategist at CFRA Research, told CNBC.

Nvidia, for instance, gave an estimate for the current quarter that excludes H20 shipments to China — a reminder of how trade restrictions have complicated the outlook for U.S. tech giants.

A formal U.S.-China deal that clarifies — and perhaps loosens — trade parameters could prompt Big Tech companies to raise their guidance, potentially igniting another wave of buying in a market already dominated by tech heavyweights.

Beyond silicon and software, soybeans are back in play. Reports suggest China may ease its unofficial boycott of U.S. soybeans as part of the agreement. That would go some way toward assuaging Scott Bessent’s pain because he’s not just the U.S. Treasury Secretary, but also a soybean farmer, as he put it in a televised interview.

While Bessent meant that literally — he owns soybean farmland — in the broad trade war between China and the U.S., trade tensions have made daily life more difficult for most of us, turning us all into reluctant farmers of one kind or another. A truce, if it comes, might let everyone harvest some peace.

Trump suggests an agreement with China is imminent. Speaking aboard Air Force One on Monday, Trump said he and Chinese President Xi Jinping are going to “come away with” a trade deal. The U.S. president also signaled a TikTok deal could come on Thursday.

Amazon is preparing to announce largest layoffs in its history. The cuts, which will impact almost every division, will begin Tuesday, according to a person familiar with the matter. Up to 30,000 employees will be affected, Reuters reported.

HSBC beats earnings expectations. Third-quarter profit before tax came in at $7.3 billion, higher than the $5.98 billion estimate compiled by the bank. However, that figure was 14% lower from a year earlier because of higher operating expenses.

Record highs for U.S. stocks. The three major U.S. indexes and the Russell 2000 rose Monday to close at all-time highs. Asia-Pacific markets slipped Tuesday. South Korea’s Kospi fell even as the country’s economy expanded more than expected in the third quarter.

[PRO] Time to put cash elsewhere when Fed cuts rate. The returns of money market funds depend on prevailing interest rates. When the Fed all but certainly cuts rates, investors should start moving their funds out of cash instruments, analysts say.

How Saudi Arabia is diversifying away from oil — and betting big on AI

According to Saudi Arabia’s Minister for Investment Khalid Al Falih, 50.6% of the Saudi economy is now “completely decoupled” from oil.

The country is doubling down on fast-growing sectors such as artificial intelligence for growth. Al Falih said the kingdom will be a “key investor” in developing AI applications and large-language models, adding that Saudi Arabia would also build data centers “at a scale and at a competitive cost not achieved anywhere else.”

— Lim Hui Jie