🚀 Rare earth socks fall

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Market Overview
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Year To Date Performances:

1. Rare earth stocks tumbled Monday after U.S. officials signalled that China will likely delay its planned export controls on critical minerals as part of a forthcoming trade deal between President Donald Trump and Chinese leader Xi Jinping. Shares of Critical Metals, USA Rare Earth, and MP Materials all dropped sharply by as much as 8% as investors recalibrated expectations amid supply constraints that had previously boosted valuations. Treasury Secretary Scott Bessent said Washington and Beijing were nearing an agreement to avert Trump’s proposed 100% tariffs on Chinese goods in exchange for China postponing its restrictions on rare earth exports. Analysts now expect a temporary truce, with China deferring its controls for at least a year, easing fears of immediate disruption to the global critical minerals supply chain.

2. The AI boom is powering the U.S. economy and driving record stock market highs, but much of the country remains in economic survival mode. While tech giants like Nvidia, Microsoft, and Alphabet fuel growth through massive AI infrastructure investments that added 1.1% to GDP this year, small and mid-sized businesses are struggling under the weight of tariffs, inflation, and weaker consumer demand. Owners like Cameron Pappas of Norton’s Florist say they’re cutting costs and redesigning products just to stay afloat as operating expenses rise. The contrast between Wall Street’s AI-fueled optimism and Main Street’s economic fatigue is stark: major consumer companies such as Target, Starbucks, and Wyndham are cutting jobs, retail spending is expected to decline sharply over the holidays, and small businesses, responsible for roughly 40% of GDP, report being stuck in “survival mode.” Experts warn that while AI spending is inflating short-term growth, most companies won’t see its productivity gains for years, leaving the broader economy vulnerable to a slowdown once the AI investment surge cools.

3. Global stocks climbed Monday as optimism grew that the U.S. and China are nearing a trade pact, sparking rallies across Asia, Europe, and U.S. futures markets. Japan’s Nikkei surged past the 50,000 mark for the first time, while South Korea’s Kospi rose 2.6% and European markets followed with smaller gains, led by technology, mining, and industrial stocks. Analysts said renewed hopes of a longer-lasting trade truce between Washington and Beijing were the main catalyst, with investors viewing it as a sign that tariff hostilities may stay muted for months to come. However, economists cautioned that deeper geopolitical frictions remain unresolved, and recent unpredictable trade moves, like new U.S. tariffs on Canada, show that volatility could easily return. Even so, Goldman Sachs strategists described the outlook as “modestly pro-risk,” suggesting that strong liquidity and easing trade tensions could help sustain markets through the late-cycle slowdown.

   Headlines

   1. Swiss firm Novartis will purchase US firm Avidity Biosciences for $12B.

   2. Huntington Bancshares has agreed to purchase Cadence Bank for $7.4B.