There has been plenty for advisors and investors to digest this week, from big change in the Fed hotseat to President Donald Trump’s closely watched trip to Beijing for talks with his Chinese counterpart Xi Jinping.
The summit with Xi was seen as a chance for the two countries to reset their relationship after years of trade tensions and also came amid the backdrop of geopolitical tensions centered on the Middle East.
Trump described the visit as “incredible” during a meeting with Xi in China’s Zhongnanhai leadership compound. “I think that a lot of good has come of it – we’ve made some fantastic trade deals, great for both countries,” he said, and was effusive in his praise for his Chinese counterpart. “We’ve settled a lot of different problems that other people wouldn’t have been able to settle,” he added. While specific details of many of the deals that he alluded to have not yet been released, speaking to reporters on his way home, Trump said that China has agreed to order 200 planes from Boeing (Ticker: BA), a figure that could rise to 750 aircraft. The deal also includes “approximately 400, 450 engines” from GE Aerospace (Ticker: GE), according to Trump.
Xi is also expected to visit the U.S. in September for further talks. “Like reciprocal trade, the visit will be reciprocal,” said Trump, in Beijing. “You’re going to walk away, I hope, hopefully very impressed, like I’m very impressed with China,” he told Xi.
Elsewhere, Trump’s nominee as Federal Reserve Chair Kevin Warsh was confirmed this week. The former Fed governor succeeds Jerome Powell, who has locked horns with Trump over interest rates, in the Fed hotseat.
“Uncertainty continues to be lifted from stocks driven by Warsh's confirmation as Fed Chair, stable Iran headlines, and progress on the U.S.-China relationship, and this is giving investors the greenlight to put new money to work,” said Rick Gardner, chief investment officer at RGA Investments, in a note Friday.
However, inflation is also in the spotlight. The latest Producer Price Index (PPI) data came in much higher than expected Wednesday, registering the biggest jump in more than three years. PPI is an important indicator of inflation and the latest number came hot on the heels of the latest Consumer Price Index data, which came in higher-than-expected Tuesday.
There has been plenty of speculation about the Fed’s future rate strategy under its new chair although RGA Investments’ Gardner notes that Warsh must also contend with the latest inflation numbers.
“While it may be difficult for incoming Fed Chair Warsh to cut interest rates in the near-term given the hot economic and inflation data, we believe the markets can withstand this, and can still move higher even if the Fed stays on hold through year-end,” he said.
At its latest meeting last month, the central bank stuck to its path of keeping its policy rate steady at 3.5% to 3.75%, once again shrugging off pressure from Trump to cut interest rates. The Fed made its last rate cut in December 2025.
The market has seen intense volatility in recent months linked to the conflict between the U.S. and Iran, although the S&P 500 has registered a series of records recently. The index hit new intraday and closing highs on Thursday, as did the Nasdaq, boosted by strong tech earnings. The Dow Jones Industrial Average also closed above 50,000 for the first time since February.
“Now that stocks have breached key levels, we believe that any dips are buyable, especially for investors who are sitting on too much cash and were not as active in markets when valuations contracted in March,” said RGA Investments’ Gardner. “While stock valuations are elevated, these valuations are also justified from the underlying earnings strength.”
“If the Iran war overhang wasn't in the picture, we would expect stock prices to be higher from current levels,” he added.
The latest earnings season has certainly provided a boost to the markets. Speaking at Goldman Sachs’ RIA Professional Investor Forum in New York earlier this week, Lindsay Rosner, the company’s head of multi-sector investing described the recent run of U.S. corporate earnings as “absolutely remarkable.”
“Our corporations are in a great position and that feeds the economy,” she added.
The S&P 500 index ended Thursday’s session up 0.8% while the Dow Jones Industrial Average was also up 0.8%, although the rally may be erased Friday. Stock futures are sliding with S&P 500 contracts down 1.2% and Dow Jones Industrial Average contracts are down 0.9%.
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