US stocks reversed their gains on Wednesday as markets remained unsettled by US-China trade tensions amid hopes for interest rate cuts and strong results from Wall Street banks.

The Dow Jones Industrial Average (^DJI) and the S&P 500 (^GSPC) each fell 0.2%, following a rocky session on Tuesday for markets. Meanwhile, the tech-heavy Nasdaq Composite (^IXIC) dropped just below the flat line.

Gains slipped after a stronger start to the session, following a solid start to earnings season, which buoyed market spirits in the face of US-China trade friction and a US government shutdown with no end in sight.

On Wednesday morning, Bank of America (BAC) posted a 23% jump in profit, becoming the latest big US bank to benefit from this summer's bonanza of big deals on Wall Street. Morgan Stanley (MS) saw its profits surge 45% in what its CEO hailed as an "outstanding" quarter.

Meanwhile, comments from Jerome Powell also provided a boost. The Federal Reserve Chair said Wednesday that "downside risks to employment appear to have risen," implying more rate cuts are on the cards. Investors closely scrutinized Powell's remarks, given the current lack of insight into the economy as the federal stoppage delays the release of key data.

Investors have cemented bets on a rate cut later this month, and odds of a rate cut in December have jumped in recent days to around 96%. The Fed's Beige Book summary of economic conditions could capture attention on its release due at 2 p.m. ET.

The US-China trade tensions that have unsettled markets continued to bubble, after President Trump said he was considering an embargo on cooking oil from China in response to its cut in purchases of US soybeans. The threat follows China's fresh sanctions on five US subsidiaries of South Korean shipbuilder Hanwha.

Treasury Secretary Scott Bessent on Wednesday raised hopes on that front, saying Trump was still planning to meet with Chinese leader Xi Jinping later this month.

At the same time, the Trump administration is preparing for the government shutdown to drag on. A list of federal programs earmarked for cuts is expected this week, and the White House budget office is scrambling to find ways to pay military members and law enforcement.

Several regional bank stocks fell on Wednesday afternoon after the companies reported third quarter earnings.

Shares of Citizens Financial Group (CFG) dropped 1%, while PNC (PNC) fell more than 2%, as its outlook was softer than expected and as it saw expensive commercial deposits weigh on net interest margins.

Memphis-based First Horizon (FHN) led the declines, with the stock dropping over 10%. First Horizon reported that deposits declined by $52 million year over year.

The stock reaction in regional banks juxtaposed the strength in the large Wall Street banks' results and their stocks' move higher. Bank of America (BAC) and Morgan Stanley (MS) shares were up 3% and 5%, respectively, on the back of a dealmaking boom and robust trading activity.

Additional regional banks, Fifth Third (FITB) and Comerica (CMA), will report earnings on Friday, providing investors with further clues about the state of household balance sheets. First Horizon CEO Bryan Jordan noted that the US economy, in the bank's view, \\"continues to perform reasonably well.\\"

Some Australian stocks are benefiting from the US-China trade war.

Cooking oil producer Australian Oilseeds (COOT) saw its stock rise about 260% to $3.48 after President Trump threatened to cut off US business with Chinese producers.

\\"I believe that China purposefully not buying our Soybeans, and causing difficulty for our Soybean Farmers, is an Economically Hostile Act,\\" he said in a Truth Social post on Wednesday. \\"We are considering terminating business with China having to do with Cooking Oil, and other elements of Trade, as retribution.\\"

Meanwhile, shares of Australian miners with critical minerals projects such as Nova Minerals (NVA) and Resolution Minerals Ltd. (RML.AX) ripped higher on Tuesday as the companies were set to play a role in talks between the Australian government and the Trump administration as the US looks to diversify its critical minerals and rare earths supply chain from China.

Yahoo Finance's Pras Subramanian reports:

United Airlines (UAL) is on deck to report third quarter earnings after the bell on Wednesday, a week after rival Delta (DAL) saw premium and business travelers boost its results.

Chicago-based United is expected to post operating revenue of $15.28 billion, up 3% compared to a year ago, per Bloomberg consensus estimates. United is expected to post adjusted EPS of $2.66, with available seat miles coming in at 86.51 billion and a load factor (percentage of available seats filled by passengers) of 85.2%.

A week ago, Delta said a \\"significant improvement\\" in its revenue outlook led the airline to tighten its outlook to the upper bounds of its projection, with its premium business up 9% and corporate sales up 8%.

Read the full story here.

Apple (AAPL) shares climbed 1.4% as the company unveiled new products and tech stocks led a broader advance in US equities.

Yahoo Finance's Dan Howley reports:

Apple (AAPL) on Wednesday announced its new M5 processor, which it says offers improved AI performance in both its latest $1,599 MacBook Pro and $999 iPad Pro.

Apple says the chip, the company's most recent homegrown processor, includes an upgraded CPU and a 10-core GPU with rural accelerators in each core.

That, Apple says, means the M5 provides 4 times the GPU compute performance compared to the M4 and 6 times compared to the M1. Graphics performance is 35% faster than the M4 and 2.5 times faster than the M1. The CPU also offers 15% better multithreaded performance than the M4.

Read the full story here.

Gold (GC=F) continued to topple record highs, with futures climbing another 1% to trade at over $4,211 an ounce on Wednesday and spot prices trading around $4,163, according to S&P Global Market Intelligence. Silver (SI=F) also rose over 1% to $51 per ounce as investors continue to pile into hard assets.

The run-up in gold and silver has led some market watchers to suggest the precious metals may be overvalued. Though others on Wall Street still see room to run.

As Yahoo Finance's Jake Conley reports, if just half a percent of US assets held by foreign investors were to be moved into gold, the yellow metal could hit $6,000 per ounce, JPMorgan analysts said.

Weighing in on the recent moves separately, JPMorgan CEO Jamie Dimon said on Tuesday that he understood why gold is attractive right now — though he refrained from commenting on whether the metal may be overbought.

“I’m not a gold buyer — it costs 4% to own it,” Dimon said at Fortune’s Most Powerful Women conference, per Bloomberg. “It could easily go to $5,000, $10,000 in environments like this. This is one of the few times in my life it’s semi-rational to have some in your portfolio.”

Read more here.

US stocks climbed on Wednesday at the market open.

The Dow Jones Industrial Average (^DJI) moved up roughly 0.4%, while the S&P 500 (^GSPC) rose about 0.7%. The Nasdaq Composite (^IXIC) added 1%, reversing the prior day's loss, when the tech-heavy index led stocks down during a rocky session.

The major US indexes are gaining as earnings season kicks off with strong results from Wall Street banks and as investor hopes grow for further interest rate-cuts from the Federal Reserve this year.

Nvidia (NVDA) shares rose 2% premarket on Wednesday as HSBC (HSBC) analyst Frank Lee upgraded the stock to Buy from Hold.

Lee said he expects the market for Nvidia's AI chips to keep growing beyond its Big Tech customers — pointing to the Stargate AI projects in the US and abroad and OpenAI's (OPAI.PVT) recent deal with Nvidia — \\"leading to continuous earnings growth\\" for the chipmaker. Lee raised his price target on shares to $320 from $200.

Also boosting Nvidia's shares was the company's participation in another multibillion-dollar deal in the AI space. An investor consortium called the Artificial Intelligence Infrastructure Partnership (AIP), which includes the AI chip giant, BlackRock (BLK), Microsoft (MSFT), and Elon Musk's xAIm said it will acquire 100% of the equity in data center company Aligned Data Centers. The transaction would value Aligned Data Centers at roughly $40 billion.

AIP's investment is the latest in a tangled web of AI deals involving vendors of AI infrastructure investing in their own customers, and vice versa — a circular dynamic that analysts warn is contributing to a stock market bubble.

Bitcoin (BTC-USD) rose 0.5% on Wednesday morning, trading at around $112,009 per token, following a steep 5% loss the day before as US-China tensions reescalated and Fed Chair Powell implied that more rate cuts were possible.

As my colleague Hamza Shaban wrote in today's Morning Brief newsletter, after the crypto had been set up for a strong October, investors are now resetting their speculative bets.

The back-and-forth between Washington and Beijing forced a pause across an array of bullish markets, rattled investors, and reminded Wall Street that, far from being a settled matter, tariffs are still in play as a political weapon and a powerful destabilizer. But bitcoin and other cryptocurrencies were hit especially hard.

Part of the plunge in prices has to do with the excitement surrounding crypto investing, which translates to more aggressive wagers using borrowed money. Some investors who wielded leverage on the chance of winning outsized gains were left dangerously exposed when panic selling took hold. A wave of forced liquidations exacerbated the fall.

Read more here.

Dollar Tree's (DLTR) stock rose 8% before the bell on Wednesday after the retailer announced at its Investor Day that it expects earnings per share to gain as much as 10% annually over the next three years. The company said that despite higher traffic from consumers that can afford to spend more, tariffs still present a problem.

Bloomberg News reports:

The Chesapeake Virginia-based company also said earnings per share is expected to grow by a “high-teens percentage” in fiscal 2026 due to cost benefits.

Dollar Tree, which made this projection ahead of an investor presentation slated for later on Wednesday, is trying to sharpen its focus under Chief Executive Officer Mike Creedon after selling the struggling Family Dollar chain for about $1 billion. That was far less than the almost $9 billion it paid for the business ten years ago.

While more traffic from higher income consumers has helped the company, tariffs are expected to present a tougher hurdle in the second half. At the same time, competition has intensified as shoppers cut back on spending.

Read more here.

Bank of America shares popped in premarket trading after the big bank reported a rise in profit, dealmaking and trading that outperformed analysts' expectations.

Yahoo Finance's David Hollerith reports:

Third quarter profits at Bank of America (BAC) climbed 23%, becoming the latest banking giant to benefit from a Wall Street dealmaking boom.

The country’s second-largest bank posted net income of $8.47 billion, which was $1 billion more than what analysts anticipated.

A big reason for that performance is that dealmaking fees from the Charlotte-based lender surged 43% from a year ago to $2 billion while client trading rose 8% to $5.3 billion.

Both Bank of America’s third quarter trading and dealmaking fees came in higher than analysts forecast, according to Bloomberg data.

Bank of America CEO Brian Moynihan noted \\"strong fee performance from our market-facing businesses,\\" in an earnings statement.

\\"With continued organic growth, every line of business reported top and bottom-line improvements,\\" Moynihan added.

Read more here.

Economic data: MBA Mortgage applications (week ending Oct. 10); Empire Manufacturing (October); Real average hourly earnings (September); Real average weekly earnings (September); Federal Reserve Beige Book

Earnings calendar: Bank of America (BAC), Morgan Stanley (MS), PNC (PNC), Synchrony Financial (SYF), Citizens Financial Group (CFG), Progressive (PGR), Abbott Laboratories (ABT), Prologis (PLD), United Airlines (UAL)

Here are some of the biggest stories you may have missed overnight and early this morning:

Wall Street boom boosts profits at Bank of America

China's retaliation cements a bitcoin reset

'Absolutely' a bubble: Wall Street warns on AI as investors go all-in

Trump's shutdown power grab goes unchecked by GOP lawmakers

AI helps ASML post orders beat, but China outlook dims

Trump threatens 'retribution' on China over soybeans

VIX curve inversion tests trader resolve with volatility rising

Can Tesla stay a trillion-dollar company on just 2 models?

LVMH shares surge after surprising return to sales growth

Here's a look at some of the top stocks trending in premarket trading:

AMD (AMD) stock rose more than 2% in premarket trading on Wednesday. It was announced on Tuesday that Oracle would deploy more than 50,000 of AMD AI chips.

MP Materials Corp. (MP) stock fell 3% before the bell on Wednesday following the prior days trading when it closed 3%. The rare earth company is in focus right now as China impose export restrictions on their rare earths and investors look to alternative firms.

Tesla (TSLA) stock rose 1% in premarket trading on Wednesday. A report this week from Kelly Brook stated that sticker prices for US cars have now reached $50k for the first time.

Wall Street is growing louder with warnings that the artificial intelligence trade may be overheating, writes Yahoo Finance's Allie Canal.

She reports:

After months of record gains in AI-linked stocks and corporate spending, concerns are mounting that the boom is starting to look like a bubble.

JPMorgan CEO Jamie Dimon underscored that tone of caution while speaking to reporters on Tuesday, calling elevated asset prices “a category of concern.”

“When asset prices are elevated, you have further to fall,” Dimon said, adding that while “consumers are still spending [and] companies are making money,” valuations and credit spreads remain stretched.

“You have a lot of assets out there which look like they’re entering bubble territory,” he said. “That doesn’t mean you don’t have 20% to go — it’s just one more cause of concern.”

That caution comes as new sentiment data shows investor exuberance reaching extremes.

Bank of America’s latest Global Fund Manager Survey, released Tuesday, cited an “AI equity bubble” as the top global tail risk for the first time in its history. ...

Another early warning sign: Correlations across sectors have fallen to their lowest level since the current bull market began. Colas said these “unusually low” readings tend to appear when investor confidence runs “too high” and is a pattern that often precedes short-term pullbacks.

Read more here.

LVMH (MC.PA, LVMUY) unexpectedly reported a return to sales growth in its third quarter earnings, a sign the decline in luxury demand is easing.

Paris-listed shares of the owner of Louis Vuitton and Christian Dior rose as much as 14% — the biggest intraday gain since 2001 — while its US-listed stock jumped around 9% in premarket.

Reuters reports:

While LVMH’s third-quarter revenue rose just 1% on an organic basis, the increase snapped two quarters of declines and stirred optimism that demand from China, long a driver of growth, might at last be returning. All the company’s divisions topped analysts’ estimates, and the region that includes China contributed to growth for the first time this year.

“The pace of recovery, stemming from all regions, is encouraging and bodes well for a return to growth next year and beyond,” JPMorgan analyst Chiara Battistini said in a note.

The results spurred share gains in companies ranging from Gucci-owner Kering SA (KER.PA, PPRUY), which rose as much as 8.8% in Paris, to Hermes International (HESAF, HMIA.F) and Hong Kong-listed Prada SpA (1913.HK).

Read more here.

ASML's (ASML, ASML.AS) orders topped estimates in the third quarter amid an AI investment boom, and the Dutch maker of chipmaking equipment said it expects to keep benefiting.

Shares rose over 3% in premarket trading even after ASML also warned it expects Chinese demand to drop significantly next year,

Reuters reports:

CEO Christophe Fouquet said Europe's largest tech firm by market capitalization was seeing \\"continued positive momentum around investments in AI.\\"

That boom was helping customers both in advanced logic chips — those used in smartphones and AI datacenters — and advanced memory chips also needed for AI. ...

Net bookings, the most closely-watched earnings figure, were 5.40 billion euros ($6.27 billion) in the third quarter, versus analysts' consensus estimate of 5.36 billion euros.

ASML said it expects Chinese sales to fall \\"significantly\\" next year, after having made up nearly half of company sales in 2024 and a third so far in 2025.

Read more here.

Gold (GC=F) hit a new record, bolstered by the ongoing US-China trade spat alongside comments from the Fed giving investors hope for a rate cut later in the year.

Bloomberg reports:

Bullion rose to a fresh peak of $4,185 an ounce. Spot silver advanced after a volatile day on Tuesday that saw prices surge to an all-time high above $53.54 an ounce, before tumbling sharply amid signs a historic squeeze is starting to ease.

Yields on US Treasuries fell to the lowest levels in weeks on Tuesday, after Fed Chair Jerome Powell signaled the US central bank is on track to deliver another quarter-point cut later this month. Lower yields and borrowing costs tend to benefit precious metals, which don’t pay interest.

Meanwhile, risk-off sentiment swept markets — boosting gold’s haven appeal — after President Donald Trump said he might stop trade in cooking oil with China. The comments injected fresh tensions into the relationship between the world’s two largest economies, with Beijing vowing to retaliate after Washington threatened an additional 100% tariff on China last week.

Read more here.