Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed in positive territory ahead of another busy week of earnings.
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During the first quarter, President Trump initiated a 20% tariff on China, citing the country’s involvement in exporting the drug. As part of a trade truce reached earlier this week, he agreed to halve the tariff to 10%. Now, he’s considering completely scrapping the tariff if China cracks down on the flow of fentanyl and the precursor chemicals used to create the drug. “As soon as we see that, we’ll get rid of the other 10%,” Trump told reporters aboard Air Force One on Friday.
Trump has also urged Senate Republicans to overhaul the filibuster rule as the government shutdown extends to its 31st day, the second-longest on record behind the 35-day shutdown in 2018 and 2019.
“It is now time for the Republicans to play their ‘TRUMP CARD,’ and go for what is called the Nuclear Option – Get rid of the Filibuster, and get rid of it, NOW,” Trump said in a Truth Social post. He argued that ending the filibuster would allow legislation to pass with a simple majority in a GOP-controlled Senate, improving the odds of reopening the government.
Meanwhile, Dallas Fed President Lorie Logan argued that the recent 25 bps rate cut was unnecessary given a balanced labor market and inflation remaining above the Fed’s 2% target. She stated she would be unlikely to support another rate cut in December unless clear evidence emerged that inflation is falling faster than expected or that the labor market is cooling significantly.
Logan’s position aligns with that of Fed Bank of Kansas City President Jeff Schmid, the only October Federal Open Market Committee (FOMC) voter to advocate for holding rates steady. Schmid warned that even a 25 bps rate cut wouldn’t meaningfully affect labor market conditions but could have longer-lasting effects on inflation.
Finally, the National Association of Active Investment Managers (NAAIM) Exposure Index, which measures the exposure active investment managers have to U.S. stocks, climbed above 100 for the first time since July 2024. The surge comes as concerns grow about an AI-driven bubble, with big tech firms ramping up AI investment while the S&P 500 (SPX) trades near all-time highs. The benchmark index is trading at a forward price-to-earnings (P/E) ratio of 23x, well above its 20-year average of roughly 16x.
The S&P 500 (SPX) closed with a 0.26% gain, while the Nasdaq 100 (NDX) returned 0.48%.
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