Dow Jones, S&P 500, Nasdaq rally to record highs on US-China deal hopes; Gold sinks

Benchmark indices on Wall Street had a strong start to the new trading week, whose second half promises to be full of action and full of news. All four major indices ended at record high levels on hopes of a potential trade deal between the US and China.

The Dow Jones surged nearly 350 points to close above the 47,500 mark, while the S&P 500 gained 1.2% to end near the mark of 6,900 for the first time. Buoyed by Nvidia and other semiconductor stocks, who stand to be the biggest potential beneficiaries of any trade deal between the two major economies, the Nasdaq gained nearly 2% and closed above 23,500. The Smallcap Russell 2000 index also hit a record.

UBS continued to maintain its optimism on the US equities, expecting the S&P 500 to now reach levels of 7,300 by June 2026.

Shares of Qualcomm hit an intraday record, surging as much as 18% before closing 12% higher after it launched a new chip aimed at the data centre market. This marked a shift for Qualcomm as it mainly focused on chips for mobiles and wireless devices. The two new chips will be direct competition for current leaders Nvidia and AMD, but both of these stocks also ended at the day's high on Monday on the trade deal optimism.

Enroute to Japan on board the Air Force One, US President Donald Trump said that he "feels good" about a deal with China and that he has a lot of respect for Chinese President Xi Jinping. The delegates of both countries wrapped two days of extensive talks in Malaysia over the weekend, setting the ground ready for the two leaders to meet on Thursday.

The one aspect of the market that has not reacted positively to the potential trade deal news between the US and China are the US-based rare earth companies, stocks of which fell up to 17% on Monday, after Treasury Secretary Scott Bessent remarked that China will consider delaying their rare earth export curbs by a year as part of a trade deal with the US.

The surge in risk assets has led to continued profit booking in Gold, and spot prices fell below the $4,000 mark for the first time since October 9. Futures too slid below the $4,000 mark in early trading on Tuesday. Brent Crude, WTI, and the US Dollar index were little changed from their previous levels.

“With the Fed on track to cut rates, extending the run would appear to hinge on this week’s lineup of high-profile earnings releases,” said Chris Larkin at E*Trade from Morgan Stanley. “And it may, barring any surprises in US-China trade negotiations.”

Later today, companies like Visa, Novartis and UnitedHealth will be reporting their quarterly results. UnitedHealth has among the highest weightage on the Dow Jones and hence its results assume significance for the index movement.