U.S. stocks surged on Monday, recovering from a substantial sell-off just days earlier. The S&P 500 climbed by 1.6%, marking its best performance since May. Meanwhile, the Dow Jones Industrial Average rose by 1.3%, and the Nasdaq composite jumped 2.2%. This upward momentum followed President Donald Trump softening his criticism of China, easing investor concerns after he had threatened significant tariffs on the world’s second-largest economy.
Trump’s comments on social media offered reassurance that “it will all be fine,” which contrasted sharply with his previous statements that had sent shockwaves through the market. Just last Friday, the S&P 500 faced its worst drop since April, following Trump’s accusations of China committing a “moral disgrace” in its dealings with other nations. The president had pointed to a hostile letter from China regarding restrictions on rare earth exports, essential materials used in manufacturing various products, including electronics and aerospace components.
In a significant shift, Trump stated, “China’s leader, Xi Jinping, doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!” This change in tone raised hopes that the two largest economies might navigate their differences without escalating tensions further.
The market’s fluctuations mirror its volatile behavior earlier in the year, particularly after Trump’s announcement of global tariffs, which he later moderated to allow for trade negotiations. According to strategists at Morgan Stanley, if trade tensions ease, a sustained recovery could continue into 2026.
The U.S. stock market was ripe for a rebound after a notable surge of 35% in the S&P 500 since April, which had raised concerns that valuations were becoming unsustainable. Despite the recent volatility, the index remains close to its all-time high achieved last week. Market analysts suggest that the upcoming earnings season will be crucial for determining whether stock prices can remain justified in relation to corporate profits.
Broadcom, a major player in the technology sector, saw a significant gain of 9.5% after announcing a collaboration with OpenAI to develop custom artificial intelligence accelerators. This excitement surrounding AI technology has been a contributing factor to the market’s stability.
In broader economic discussions, analysts, including those from Bank of America, remain optimistic about the potential for S&P 500 companies to exceed profit expectations. Recent reports indicate resilience in the U.S. economy, with a weaker dollar enhancing overseas sales for major American companies.
Internationally, stock markets in Europe saw modest gains, recovering from earlier losses in Asia, where Hong Kong’s index fell by 1.5% and Shanghai’s by 0.2%. China reported an 8.3% increase in global exports for September, suggesting a shift in focus from U.S. markets to other regions.
As the market prepares for a busy earnings reporting week, major companies such as JPMorgan Chase, Johnson & Johnson, and United Airlines are set to reveal their financial performances, which could further influence market trends in the coming days.
