US market opened higher on Tuesday amid renewed optimism over a potential US-China trade deal, with President Donald Trump expected to meet Chinese President Xi Jinping. Investors are also keeping a close watch on the Federal Reserve’s meeting, led by Chair Jerome Powell, for signals of a possible interest rate cut.
In early trading, the Dow Jones Industrial Average climbed 200.88 points (0.42%) to 47,745.06, the S&P 500 added 9.94 points (0.14%) to 6,884.15, and the Nasdaq Composite advanced 114.33 points (1.47%) to 223,754.88.
US -China deal updates
US and China are expected to make enough progress on key economic issues like China’s control of critical minerals and US export restrictions to calm financial markets and avoid more economic damage for now.
Trump and Xi are scheduled to meet on Thursday in South Korea, and several days of talks beforehand have raised hopes for an agreement. Treasury Secretary Scott Bessent said he doesn’t expect Trump’s threat of 100% extra tariffs on China to actually take effect on Nov. 1. He also said he believes China will start buying US soybeans again and delay its export limits on rare earth minerals for a year.
Chinese state media confirmed that talks in Malaysia over the weekend made progress, reporting a “basic consensus on arrangements.” Investors are also waiting to see what happens at the Federal Reserve’s meeting this week.
Fed to cut rates?
Fed is widely expected to cut interest rates by a quarter point at its meeting on Wednesday, October 29, after weaker-than-expected inflation data last week. This would lower the federal funds rate to 3.75%–4% from 4%–4.25%, marking the second rate cut since September. Traders also expect another cut in December.
As per reports, slower job growth and easing prices could give the Fed more room to lower rates further. The Consumer Price Index (CPI) rose 0.3% in September, putting yearly inflation at 3%, both below expectations. It was the only official data released during the ongoing government shutdown, now the second longest in US history.
Meanwhile, rising jobless claims show that the labour market is cooling, though most economic reports, like the unemployment rate (last estimated at 4.3% in August) have been delayed by the shutdown.
Trump has been pushing for lower interest rates, keeping Fed Chair Jerome Powell under pressure, even though some Fed officials worry that cutting too much could make inflation worse.
Powell and other Fed members have been careful about how quickly to cut rates, trying to balance inflation risks with signs of a weaker job market. Trump, however, argues that inflation is no longer a problem and wants the Fed to cut rates more aggressively.
After keeping rates steady for five straight meetings due to concerns over Trump’s economic policies, the Fed made its first rate cut of 2025 in September. Powell called the move a “risk-management measure” in response to a slowing job market and said the Fed will decide on future policy “meeting by meeting.”