CNBC Daily Open: Strong bank earnings seem to overshadow escalating trade war

China has been using its dominance in the rare earth industry to slash prices, driving foreign competitors out, U.S. Treasury Secretary Scott Bessent told CNBC on Wednesday stateside in an exclusive interview. He characterized the country as having “a nonmarket economy.”

In response, the Trump administration will “exercise industrial policy” to set price floors in a range of industries. Price floors are a limit of how low suppliers can charge for goods or services. They are typically set above the market rate and are essentially a form of government price control.

Meanwhile, Bank of America and Morgan Stanley reported blockbuster second-quarter earnings that shot way past analyst expectations. They joined other major U.S. banks, such as JPMorgan Chase and Goldman Sachs, in ihaving a blowout quarter that was turbocharged by robust dealmaking and stock market highs.

And despite U.S. President Donald Trump’s continued saber-rattling at China on the trade front, traders don’t seem ready to let go of equities. On Wednesday stateside, the S&P 500 and Nasdaq Composite rose, and the Russell 2000 hit a fresh record. After all, earnings reports are indicating that the economy isn’t yet faltering, despite firms already experiencing higher costs because of tariffs, according to the U.S. Federal Reserve’s Beige Book.

Whether traders continue pushing equities to new highs amid fractious trade relations with China will depend, in part, on the earnings of major technology companies such as Tesla and Intel due next week.

White House will set price floors in industries. U.S. Treasury Secretary Scott Bessent told CNBC Wednesday stateside that the move is meant to combat China’s “nonmarket economy.” Bessent also rejected the idea that a stock market decline will change the U.S.’ stance toward China.

Tariffs are pushing prices higher, Fed report shows. The Fed Beige Book further noted that while some companies are keeping prices unchanged to remain competitive, others are “fully passing higher import costs along to their customers.”

Consortium purchases Aligned Data Centers. A consortium of investors including Nvidia, Microsoft, BlackRock and xAI are behind the acquisition, which amounts to $40 billion. It’s the largest global data center deal thus far, according to a release.

Stocks rise on strong earnings. The S&P 500 and Nasdaq Composite advanced Wednesday stateside after receiving a boost from Bank of America and Morgan Stanley’s massive earnings beats. Europe’s regional Stoxx 600 added 0.57%, led by luxury brands such as LVMH and Christian Dior.

[PRO] Small caps may continue rallying. The Russell 2000 is on track for its best week in 2025 — and there are signs that positive momentum could carry it even higher throughout the rest of the year.