U.S. stocks experienced a notable rebound on Monday, recovering more than half of the losses incurred from the previous Friday. The S&P 500 surged by 1.6%, marking its strongest performance since May, while the Dow Jones Industrial Average climbed 1.3%. The Nasdaq Composite recorded an impressive gain of 2.2%. This positive shift followed remarks from President Donald Trump, who eased his previous criticisms of China, which had recently unsettled the market with threats of increased tariffs.
Trump’s comments, made on his social media platform, stated, “Don’t worry about China,” and emphasized that both he and Chinese leader Xi Jinping seek to avoid economic distress. Just days earlier, Trump had accused China of being a “moral disgrace” in its international dealings and hinted at a potential 100% tax on Chinese imports set to begin on November 1. This abrupt change in tone raised hopes for improved trade relations between the world’s two largest economies.
The market’s fluctuations echoed the volatility seen in April, when Trump initially announced tariffs that rattled investors. According to Morgan Stanley strategists, if the current situation unfolds similarly to past events, there could be a rolling recovery that extends into 2026. The S&P 500 index is still close to its all-time high, achieved last week, despite concerns of overvaluation following a remarkable 35% increase since April.
Optimism surrounding advancements in artificial intelligence also contributed to the market’s uplift. Notably, Broadcom‘s stock soared by 9.5% after the company announced a partnership with OpenAI to develop AI technology. This enthusiasm hints at continued investment in tech sectors, despite worries about inflated valuations reminiscent of the dot-com bubble in 2000.
As the earnings season approaches, major U.S. corporations like JPMorgan Chase and Johnson & Johnson are set to report their quarterly results. Analysts at Bank of America predict that S&P 500 companies will exceed profit expectations, bolstered by a resilient U.S. economy and a weakening dollar, which benefits companies with international sales.
In international markets, European indexes showed gains following losses in Asia, where Hong Kong’s stock market fell by 1.5%, and Shanghai’s by 0.2%. China reported an 8.3% year-over-year increase in global exports for September, indicating a shift in its trade dynamics as manufacturers diversify away from the U.S. market.
With bond trading closed in the U.S. for a holiday, investors will be closely monitoring the evolving economic landscape as the dialogue between the U.S. and China continues to develop.
