Markets Rebound as Trump Tempers Tariff Talk, Dow Rises Nearly 500 Points

U.S. stocks surged Monday, clawing back much of Friday’s steep losses after President Donald Trump signaled that tensions with China may not escalate as sharply as investors feared.

The Dow Jones Industrial Average jumped 491 points, or 1.1%, while the S&P 500 climbed 1.5% and the Nasdaq Composite rose 2%, powered by a rebound in beaten-down tech stocks. The rally helped recoup roughly 40% of Friday’s losses, which had erased about $2 trillion in market value amid fears of a renewed trade war.

Semiconductor and AI-related names led the charge. AMD, Nvidia, and Oracle each gained more than 3%, while Broadcom soared over 7% after confirming a new partnership with OpenAI.

Trump Calms Markets—For Now

Markets turned after Trump posted on Truth Social Sunday that “it will all be fine” between the U.S. and China, suggesting he may hold off on the “massive increase of tariffs” threatened late last week. That initial statement had reignited trade war fears, particularly around rare earth minerals critical to semiconductors and electric vehicles.

“Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment,” Trump wrote, adding that both nations want to avoid economic damage.

Vice President JD Vance reinforced the softer tone, telling Fox News that the U.S. is open to negotiation if China is “willing to be reasonable,” though he warned that America still holds “far more cards” if talks falter.

“The underlying tensions haven’t gone away,” said Tobin Marcus, head of U.S. policy at Wolfe Research. “But Trump’s message tells investors they can safely buy the dip—and they’ve been rewarded for doing that all year.”

Broad-Based Rally Ahead of Bank Earnings

Roughly 80% of S&P 500 components traded higher Monday, signaling a broad recovery. Small-cap stocks joined in, with the Russell 2000 up about 2% after a 3% decline Friday.

Despite the rebound, several headwinds remain. The federal government shutdown entered another week as a key payroll deadline approaches on October 15, adding fiscal uncertainty.

Meanwhile, earnings season kicks off this week, with Citigroup, Goldman Sachs, Wells Fargo, JPMorgan, Bank of America, and Morgan Stanley all set to report results starting Tuesday.

Bond markets were closed for the Columbus Day holiday, leaving equity traders to drive the day’s optimism largely on sentiment—and on Trump’s tone shift. Whether that optimism holds through the week may depend on both the White House and Wall Street’s biggest banks.

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