And back up goes Wall Street. U.S. stocks are rallying Monday after President Donald Trump said “ it will all be fine,” just days after he sent the market reeling by threatening much higher tariffs on China.
The S&P 500 jumped 1.3% to recover nearly half its drop from Friday, which was its worst since April. The Dow Jones Industrial Average was up 483 points, or 1.1%, as of 10:45 a.m. Eastern time, and the Nasdaq composite was 1.8% higher.
“Don’t worry about China,” Trump said on his social media platform Sunday. He also said that 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!!!”
It was a sharp turnaround from the anger Trump displayed on Friday, when he accused China of “a moral disgrace in dealing with other Nations.”
He pointed to “an extremely hostile letter” from China describing curbs to exports of rare earths, which are materials used in the manufacturing of everything from personal electronics to jet engines. Trump said at the time that he may place an additional 100% tax on imports from China starting on Nov. 1.
For its part, China urged the United States to resolve differences through negotiations instead of threats. “We do not want a tariff war but we are not afraid of one,” the Commerce Ministry said in a statement posted online.
Hours later, Trump posted his less confrontational talk about China on Truth Social. The backtrack in anger, which also came before trading began on Wall Street, raised hopes that the world’s two largest economies could find a working relationship that allows global trade to continue.
The big moves for the market bracketing the weekend echo its manic swings in April. That’s when Trump shocked investors with his “Liberation Day” announcement of worldwide tariffs, only to eventually relent on many to give time to negotiate trade deals with other countries.
If this time ends up similarly, potentially even after a sharp drop for stock prices, subsiding trade tensions and uncertainty could allow for a rolling recovery to continue into 2026, according to Morgan Stanley strategists led by Michael Wilson.
To be sure, the U.S. stock market may have been primed for a drop and was perhaps just looking for a potential trigger. It was already facing criticism that prices had shot too high following a nearly relentless 35% run for the S&P 500 from a low in April. The index, which dictates the movements for many 401(k) accounts, is still near its all-time high set last week.
Not only did Trump’s backdown from tariffs help launch stock prices since April, so did expectations for several cuts to interest rates by the Federal Reserve to help the economy.
Critics say the market looks too expensive now after prices rose much faster than corporate profits. Worries are particularly high about companies in the artificial-intelligence industry, where pessimists hear echoes of the 2000 dot-com bubble that imploded.
Broadcom jumped 10.2% for Monday’s biggest gain in the S&P 500 after announcing a collaboration with OpenAI. The maker of ChatGPT will design custom AI accelerators, and Broadcom will help develop and deploy them.
For stocks broadly to look less expensive, either prices need to fall, or companies’ profits need to rise.
That’s raising the stakes for the upcoming earnings reporting season, with big U.S. companies lining up to say how much profit they made during the summer. JPMorgan Chase, Johnson & Johnson, and United Airlines are some of the big names on the calendar this upcoming week.
Fastenal tumbled 6.4% after the maker of fasteners and safety supplies reported a profit for the latest quarter that was slightly weaker than analysts expected.
At Bank of America, strategist Savita Subramanian is optimistic that companies across the S&P 500 can deliver a bigger overall profit than analysts expected. Besides reports showing a resilient U.S. economy, she also pointed in a BofA Global Research report to how the U.S. dollar’s weakening against other currencies boosts the value of sales made abroad by big U.S. companies.
In stock markets abroad, indexes were mixed in Europe following losses in Asia, which had their first opportunity to react to Trump’s threat from Friday of additional tariffs on China.
Stocks fell 1.5% in Hong Kong and 0.2% in Shanghai.
China reported its global exports rose 8.3% in September from a year earlier, the strongest growth in six months and further evidence that its manufacturers are shifting sales from the United States to other markets.
—Stan Choe, AP business writer
AP Business Writers Matt Ott and Elaine Kurtenbach contributed.