Wall Street Climbs Despite Trade War Volatility: Investors Stay “Risk-On” Ahead of Earnings Season

US stocks posted gains on Wednesday after a volatile session, as investors balanced optimism over corporate earnings against escalating US-China trade tensions. Despite intraday swings, major indexes finished higher — underscoring market resilience amid geopolitical uncertainty.

Market Overview: Volatility Returns, But Buyers Hold Ground

The S&P 500 jumped as much as 1.2% early in the session before paring gains, then rebounded again by the close. The moves reflected a familiar pattern of “buy-the-dip” activity that has defined much of 2025’s rally.

Following one of the strongest six-month runs for US equities since the 1950s, investors have treated recent pullbacks as healthy consolidations, supported by expectations of further rate cuts from the Federal Reserve.

“Investors who are buying the dip are still driving the action, keeping sentiment firm even as technical indicators show signs of strain,” said Mark Hackett of Nationwide.

Earnings Lift Sentiment: Banks and Tech in Focus

Optimism over earnings helped offset trade-related jitters. Morgan Stanley and Bank of America both posted solid Q3 results, while ASML’s upbeat comments on artificial intelligence demand boosted chipmakers.

United Airlines also reported better-than-expected earnings, reinforcing confidence in the travel sector’s recovery.

“Q3 results are backward-looking,” said Stephen Kates at Bankrate, “but positive forward guidance can be self-reinforcing — boosting confidence in both Wall Street and Main Street.”

Trade Tensions Escalate: Markets Brace for Policy Risks

Despite earnings optimism, US-China trade tensions continued to cloud the outlook.

Treasury Secretary Scott Bessent proposed a temporary pause on tariffs in exchange for Beijing easing restrictions on rare earth exports, but President Trump confirmed that the US is “in a trade war” with China.

The Federal Reserve’s Stephen Miran warned that rising policy uncertainty increases downside risks for growth and underscored the case for rate cuts in upcoming meetings.

Treasuries steadied after a rally that pushed two-year yields to their lowest since 2022, while gold surged above US$4,200 per ounce, reflecting safe-haven demand.

Analyst Take: Bull Market Still Intact

Despite geopolitical headwinds, strategists remain largely bullish.

HSBC’s Max Kettner maintained a “risk-on” stance heading into 2026, citing resilient fundamentals and manageable short-term growth expectations.

“More consolidation may be on the horizon,” said Sam Stovall at CFRA, “but history suggests deeper corrections are unlikely after strong first-half rallies.”

UBS Global Wealth Management’s David Lefkowitz added that durable earnings growth and Fed easing continue to support the broader bull market thesis.

Investor Positioning: Dip Buyers Dominate

Retail traders’ appetite for upside bets remains extraordinary.

According to Citadel Securities’ Scott Rubner, demand for call options has exceeded puts for 24 consecutive weeks, tying a record streak set in 2023.

“Although consolidation is probable as earnings unfold, investors should continue to look for opportunities to buy the dip,” said Craig Johnson at Piper Sandler.

Investor Takeaway:

Despite volatility from the renewed US-China trade dispute, strong earnings, dovish Fed signals, and robust retail optimism are keeping Wall Street’s bull run intact. For investors, short-term swings may offer strategic entry pointsahead of Q4 earnings momentum.