Stocks are rebounding after President Trump softened his tone on China, easing concerns that trade tensions between the two nations could escalate after he late Friday announced an additional 100% tariff on Chinese imports.
The S&P 500 jumped 96 points, or 1.5%, to 6,637 in morning trade, while the Dow Jones Industrial Average rose 561 points, or 1.2%. The tech-heavy Nasdaq composite gained 1.9%.
Monday’s gains erased some of Friday’s losses, when the S&P 500 shed 2.7%, marking the index’s worst day since April.
On Friday, investors were spooked by Mr. Trump’s announcement of a fresh round of tariffs on imports from China, pointing to new Chinese rules that require companies to get special approval to export products containing rare-earth materials from China.
But on Sunday, Mr. Trump struck a more conciliatory note, writing on social media that “all will be fine” with China and saying that Chinese President Xi Jinping “doesn’t want Depression for his country, and neither do I.”
“Markets woke up Monday to the smell of détente — that familiar scent of risk-on optimism that only comes after a weekend of mutual saber-rattling followed by a wink and a handshake from Washington,” Stephen Innes of SPI Asset Management said in a report.
Yet Friday’s market rout underscores that global trade conflict can still rattle investors, noted Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley, in an email.
“Although the White House appeared to moderate its stance over the weekend, additional flareups still have the potential to trigger sharp responses from the markets,” Larkin said. “Barring additional surprises, though, this week should be about the new earnings season, especially with key inflation data delayed until next week.”
Barring a breakthrough in the U.S. government shutdown, the biggest news of the week will come Tuesday, when U.S. banks kick off earnings season by releasing their most recent quarterly financial results. United Airlines and Johnson & Johnson also report this week.
Chipmakers were some of the biggest gainers in early Monday trading, with Advanced Micro Devices gaining 3.4% and Micron jumping 4.9%. Broadcom and Nvidia each gained closed to 3%.
