U.S. Stocks Rebound After Trump Eases Trade Tensions with China

NEW YORK, U.S. — U.S. stock futures rose on Monday as investors responded positively to comments by President Donald Trump regarding trade relations with China. Following a significant sell-off on Friday, futures indicated a rebound, with the Dow Jones Industrial Average expected to jump by about 363 points, or nearly 0.8%.

Trump’s remarks on Sunday suggested that the recent trade tensions with China may not escalate further. He stated, “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment,” alleviating fears among investors. Trump’s previous comments on Friday had sparked a sell-off, leading to concerns about the impact of potential new tariffs on technology companies reliant on rare earth materials from China.

Last week was challenging for the stock market as three major indices, including the Dow, S&P 500, and Nasdaq Composite, all experienced declines. The Dow fell by 2.7%, while the S&P 500 saw a 2.4% drop, marking their most significant single-day declines since April. The Nasdaq dropped by 2.5% during the same period, heavily influenced by declines in technology stocks.

The volatility stemmed from rising concerns related to the ongoing U.S. government shutdown and escalating trade conflicts with China. The shutdown has entered its second week, affecting federal employees and delaying key economic releases. Meanwhile, concerns about tariffs on Chinese goods surged after a notification from China’s Ministry of Commerce affecting exports of rare earth minerals.

U.S.-China trade relations have been a roller coaster, with recent developments leading to additional tariffs from the U.S. on Chinese products. On October 10, the Biden administration announced it would impose a 100% tariff on a range of goods from China, building upon existing tariffs that average 40%.

Investor sentiment remains jittery as earnings season begins this week, with major banks like Citigroup and JPMorgan Chase set to report. Analysts expect these reports to be scrutinized for insights into the health of the overall economy amidst trade tensions.

Investors are hopeful that the comments from Trump will help stabilize the market, especially for technology stocks that have faced severe headwinds due to their reliance on Chinese supply chains. Analysts believe that the promise of future negotiations may encourage a return to the market.