Stocks Pull Back After Record Highs
Markets reached new all-time highs earlier this week before declining sharply today following China’s announcement of new restrictions on the export of rare earth materials and related technologies. In response, President Trump threatened a significant increase in tariffs on Chinese products.
Currently, tariffs on Chinese imports stand at 30% under the existing trade truce between the U.S. and China. This sudden escalation in trade tensions sent stocks lower this morning, pulling major indices back from their record highs.
Shutdown Stalls Data, Credit Trends Ease
The ongoing government shutdown continues to delay key economic reports. Next week’s inflation data is still scheduled for release—assuming the shutdown does not persist.
Outside of official reports, consumer credit balances (which measure total outstanding credit card debt) declined slightly in August. This marks a continued downtrend since October 2024, reflecting modestly reduced consumer borrowing and spending. While that may appear concerning, the pullback remains mild compared to major downturns in past decades and can be viewed as a healthy normalization rather than a warning sign.
Recession Odds Stay Contained
The odds of a U.S. recession remain relatively low, with Kalshi markets pricing only a 33% probability of recession by 2027.
Earnings Season Set to Ramp Up
Earnings season for the third quarter is now underway, with major technology companies set to report in the coming weeks. Forecasts point to another strong round of corporate results.
Outlook: Geopolitics Create Noise, Fundamentals Stay Firm
Despite renewed trade tensions, the combination of easing monetary policy and solid earnings expectations continues to support a resilient market backdrop. With rate cuts, stable consumer trends, and steady labor conditions, risk assets remain well-positioned heading into year-end and early 2026.