US stocks surged on Monday, reversing Friday’s steep sell-off, after President Donald Trump reassured markets that trade relations with China “will all be fine.”
The Dow Jones Industrial Average rose 500 points, or 1.1%, while the S&P 500 climbed 1.3% and the Nasdaq Composite advanced 1.6%.
Technology companies led the gains. AMD and Nvidia both rose more than 3%, while Oracle also advanced.
Broadcom jumped over 7% after formalising its partnership with OpenAI on Monday morning.
The rally followed Trump’s Sunday post on Truth Social suggesting he may not implement the previously threatened “massive increase of tariffs” on Chinese goods, a warning that had sparked a sharp market decline on Friday and erased roughly $2 trillion in market value.
“Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I,” Trump wrote. “The U.S.A. wants to help China, not hurt it.”
Vice President JD Vance reinforced the message, telling Fox News that the US is prepared to negotiate if China is “willing to be reasonable,” while emphasising that the US retains “far more cards” should discussions stall.
Ongoing market challenges
Despite Monday’s rebound, the market continues to face headwinds.
The US government shutdown extended into a new week, with a major payrolls deadline looming on October 15.
Earnings season is also underway, with major banks scheduled to release results this week.
Citigroup, Goldman Sachs, Wells Fargo, JPMorgan Chase, Bank of America, and Morgan Stanley are set to report Tuesday and Wednesday, alongside several regional lenders.
US-China tensions
The latest market volatility followed China’s announcement on Thursday of expanding its rare earths export controls, prompting Trump’s initial countermeasure and triggering the Friday sell-off.
US Treasury Secretary Scott Bessent said on Monday that communications between the two sides over the weekend had “substantially de-escalated” tensions.
Speaking to Fox Business Network, he confirmed that Trump’s threatened tariffs would not go into effect until November 1 and that the president is on track to meet Chinese leader Xi Jinping in South Korea later this month.
“The 100% tariff does not have to happen,” Bessent said. “The relationship, despite this announcement last week, is good. Lines of communication have reopened, so we’ll see where it goes.”
While Monday’s rally provided relief, investors remain alert to geopolitical and domestic risks, including trade disputes, the ongoing government shutdown, and the start of earnings season.
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