Wall Street’s rally lost steam Wednesday, with indices wavering after early gains as investors weighed strong corporate results against renewed concerns over US–China trade frictions.

The S&P 500 pared its upside, finishing down 0.2% to 6,644.31, while the Dow Jones slipped 110 points (–0.2%) and the Nasdaq barely held on with a slight positive.

What’s Driving the Volatility

Earnings Strength + Financials Rally

Earnings from major banks provided relief. Morgan Stanley jumped after reporting blowout trading revenue, while Bank of America also beat expectations, helping to stabilize sentiment.

Chipmakers rallied earlier in the day after strong results from ASML and reports of rising AI demand.

Trade & Tariff Overhang

Despite the upbeat earnings backdrop, renewed worries over US–China trade policy weighed heavily. Beijing’s export controls on rare earths and Trump’s threats of aggressive tariffs have rattled markets.

Treasury Secretary Scott Bessent’s comments urging allies to “de-risk” supply chains from China added to the sense that geopolitical risk is being priced in. (More about: US Treasury chief: Beijing’s rare earths move is ‘China vs world’)

Rate Cuts & Economic Uncertainty

Federal Reserve Chair Jerome Powell’s warning that “downside risks to employment appear to have risen” renewed expectations for rate cuts, helping underpin market support.

However, the US government shutdown continues to cloud the outlook, delaying key economic data and adding uncertainty about the timing and magnitude of Fed policy moves.

What to Watch

  • China’s response to U.S. pressure on rare earth exports
  • Upcoming Fed commentary and any signals around rate cuts
  • Guidance from corporates in sectors most exposed to trade flows (e.g., semiconductors, industrials)
  • Dollar direction and its impact on multinational earnings


Markets are stuck in a tug-of-war: earnings strength and hopes for monetary easing argue for upside, while trade conflicts and geopolitical risk pull sentiment back. The day’s modest losses reflect a market still in flux — eyes remain trained on next week’s China-U.S. developments and central bank cues.

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