Stock Markets Are Priced for a Trump-China Trade Deal. Watch These Risks.

(Kevin Dietsch/Getty Images)

The threat of a trade war continues to hang over markets. Are the U.S. and China going to end up with a “fantastic deal” or 157% tariffs? Previous history suggests an agreement is likely, but don’t bet on a lasting peace.

President Donald Trump has been showing both carrot and stick this week ahead of a potential meeting with China’s leader Xi Jinping just before the Nov. 1 deadline for punitive tariffs. After listing U.S. demands over soybeans, fentanyl, and rare-earth materials on Sunday, Trump changed tune Monday, forecasting a deal that would be “fantastic for the entire world.”

The market looks to be largely betting on a peaceful resolution. Just look at Apple stock, which hit a new record Monday on strong sales of its new iPhone range in the U.S. and China. Despite diversifying its supply chain, Apple remains reliant on Chinese manufacturing, with about 80% of all iPhones assembled in the country. Few stocks have more to gain from a trade bargain.

The likely outcome is, at the very least, an extension of the current trade truce. But that doesn’t mean everything will go back to the way it was before. Each country is determined to weaken the other’s key points of leverage. For the U.S., that means investors should bet on continued support for domestic rare-earth production by companies such as steel maker Cleveland-Cliffs .

Meanwhile, China is determined to build up its own chip sector, which could hurt American semiconductor companies. Micron Technology has given up on selling server processors to Chinese data centers more than two years after being targeted by a ban from Beijing, according to reports. That could be a bad omen for Nvidia —its CEO Jensen Huang said this week the company’s Chinese market share has gone from 95% to zero.

Anything less than a full-blown trade war is probably a positive outcome for companies such as Apple and the stock market as a whole. But no matter how fantastic the deal, count on more friction between the world’s two largest economies.

— Adam Clark

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Apple Stock Driven to Record Thanks to iPhone 17

The research is in, and it looks like Apple has scored a hit with its iPhone 17 launch. Shares in Apple jumped to their first record of 2025 on Monday, helping to power the broader market higher.

• The stock rose 3.9% to $262.24, closing at a new high for the first time since Dec. 26. The move puts Apple on the brink of a $4 trillion valuation, and means its market cap surpassed Microsoft’s for the first time since Sept. 25, according to Dow Jones Market Data.
• Despite the lack of artificial-intelligence upgrades, the new iPhone 17 is winning over consumers, and that’s making Wall Street bullish. Sales of the iPhone 17 series have outstripped the iPhone 16 series by 14% during the first 10 days of availability in China and the U.S., according to Counterpoint Research data published on Monday. Shares are now up 22% over the past three months, as optimism builds heading into the holiday season.
• The gains helped power a broader rally. The S&P 500 closed 1.1% higher on Monday, erasing its losses from the Oct. 10 selloff and putting it on the brink of a new high of its own.

What’s Next: Analysts at Loop Capital raised their rating on Apple stock to Buy from Hold, hiking their price target to $315 from $226 on expectations that the company could set record iPhone shipments in 2026 and 2027.

— Adam Clark and George Glover

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Amazon Web Services Outage Knocks Businesses Out

How important are the cloud computing giants to the American business community? Ask any company that uses Amazon Web Services, which sent companies as diverse as Snap, McDonald’s, Coinbase, and the publisher of Barron’s into a scramble Monday after a massive system breakdown knocked out websites and apps.

• AWS blamed an internal subsystem for the issue, which was detected at 3 a.m. Eastern time and took about 13 hours to fix. Crypto exchange Coinbase tried to assure customers their money was safe. Barron’s publisher Dow Jones also had outages at The Wall Street Journal and MarketWatch.
• Other financial services companies reporting issues included Fidelity, Robinhood Markets, and Venmo. Passengers flying with United Airlines reported problems accessing United’s website and app early in the day. Communications tools like Slack and videogamer Roblox were also affected.
• The snafu could end up costing businesses billions of dollars in lost sales and ripple through supply chains with disruptions, the Journal reported, citing home-delivery platform Parcelhero. A CrowdStrike disruption in 2024 caused $5.4 billion in losses for Fortune 500 companies, it said.
• A total of 113 AWS services were affected by the outage, the Journal reported. A few dozen had been fixed by late morning but problems persisted through most of the day before settling down by the end of the afternoon.

What’s Next: Mike Chapple, an IT professor at the University of Notre Dame, said the outage is a reminder of the world’s reliance on major cloud providers like Amazon, Microsoft, and Google. “When a major cloud provider sneezes, the internet catches a cold,” he told the Journal.

— Mackenzie Tatananni, Callum Keown, and Janet H. Cho

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U.S. Aims to Counter China’s Dominance With Rare Earths Plan

President Donald Trump’s rare earths agreement with Australian Prime Minister Anthony Albanese is a counter to China’s dominance in the space. The plan would give the U.S. access to Australian rare earths and critical minerals and allow Australia to expand its capacity to process rare earths.

• Albanese was expected to pitch Australian mining companies for U.S. investment. He said there will be $1 billion contributed from Australia and the U.S. over the next six months, with projects that are immediately available. The deal also aims for joint ventures, including one with Pittsburgh-based Alcoa.
• Rare earth materials are used in everything from consumer electronics to vehicles, batteries, and defense systems, and the U.S. wants to secure a better supply chain and reduce its reliance on China, which has put export controls on its rare earths, sparking another shock in the U.S.-China trade war.
• Companies are also showing interest in the space. Cleveland-Cliffs CEO Lourenço Gonçalves said the renewed importance of rare earths has driven the steel maker to refocus on a potential opportunity in its mining operations, including locations in Michigan and Minnesota that show signs of rare earths metals.
• If successful, Cleveland-Cliffs would be aligned with the broader national strategy seeking critical material independence. “American manufacturing shouldn’t rely on China or any other foreign nation for essential minerals, and Cliffs intends to be part of the solution,” Gonçalves said.

What’s Next: Raymond James analyst Ellen Ehrnrooth said Congress is actively contemplating additional funding and material policy support for the critical-minerals sector. William Blair analyst Neal Dingmann believes the administration could be considering an investment in USA Rare Earth.

— Matt Peterson, Al Root, and Janet H. Cho

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Berkshire May Have Left $50 Billion on the Table. Here’s How.

Warren Buffett’s Berkshire Hathaway made one of its best investment moves buying Apple stock from 2016 to 2018. But it erred in selling most of the holding in 2024 and this year. Specifically, it has cost about $50 billion in unrealized gains, with Apple stock reaching a record on Monday.

• Berkshire didn’t respond to a request for comment. It held 280 million Apple shares on June 30, down from 906 million shares at the end of 2023. Most of its sales came in the second quarter of 2024, when it unloaded nearly 400 million shares. Barron’s crunched the numbers.
• Berkshire bought the stake, which originally totaled about one billion shares at an average price of $35 a share mostly in 2016 to 2018, based on a disclosure in Buffett’s 2021 shareholder letter. Barron’s estimates that Berkshire has received an average of about $185 a share for the Apple stake.
• That resulted in a pretax gain of more than $90 billion last year and about $6 billion so far in 2025. With the stock now trading nearly $80 higher than our estimated average sales price, that translates into about $50 billion of foregone profits. To top it off, Berkshire had to pay corporate income taxes on the Apple sale.
• Barron’s estimates those taxes at nearly $20 billion, slashing its net proceeds to about $155 a share. As for why he sold it, Buffett suggested in May 2024 that the possibility of higher corporate taxes was an issue. Its outsize position in Berkshire’s portfolio likely was also a reason.

What’s Next: There also has been speculation that Buffett wanted to raise cash and fortify Berkshire’s already formidable balance sheet ahead of his retirement as CEO at the end of 2025. Berkshire was sitting on more than $330 billion in cash on June 30.

— Andrew Bary

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Lululemon’s Founder Picks a Fight With the Board

Chip Wilson isn’t happy with the way things are going at Lululemon Athletica, including the stock’s 40% drop in the past year. So Wilson is considering an activist campaign against the activewear company that he founded—something that one analyst says could give shares the boost they desperately need.

• Wilson, who left Lululemon’s board a decade ago, has been a frequent critic since. Last week he put out an ad in The Wall Street Journal: “Lululemon: in a Nosedive.” The ad’s text said the board has dismantled the business model and allowed institutional memory to leave with departing workers.
• Wilson contends that the board focuses on Wall Street’s financial projections rather than on product, design, and innovation. In his words, he wants the board “to put product and brand back at the center” and “to “stop chasing Wall Street at the expense of customers.”
• A Lululemon spokeswoman told Barron’s that it communicates regularly with shareholders and that its board and leadership team are acting to drive long-term growth and create value. It called Wilson’s statements misleading and inaccurate and said the board and leadership are committed to the company’s best interests.
• Wilson and his entities own 9% of Lululemon’s stock, according to securities filings, less than a third of his stake before leaving the board in 2013. He pared back in part because of agreements with Lulu to settle disputes. In 2014, he sold half to Advent International for $845 million.

What’s Next: Wilson’s 9% is enough equity to give him the voice to launch a proxy fight, says BNP Paribas analyst Laurent Vasilescu, who speculates that Advent, a founding investor in Lululemon, could be open to a proxy fight. Advent wouldn’t comment.

— Sabrina Escobar

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner