Wall Street Rebounds After Trump Calms China Tensions/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stocks rebounded after President Trump softened recent harsh rhetoric toward China. His reassuring comments fueled investor optimism that a trade war may be averted. Major indexes, including the S&P 500 and Nasdaq, surged after Friday’s sharp decline.
Wall Street’s Rebound: Quick Looks
- S&P 500 gains 1.1% after Friday’s sell-off
- Dow Jones rises 413 points; Nasdaq climbs 1.3%
- Trump says U.S. “wants to help China, not hurt”
- Comments follow previous threat of 100% tariffs on imports
- April’s “Liberation Day” tariffs still echoing in markets
- Analysts see possibility of recovery into 2026
- AI stocks under scrutiny amid high market valuations
- Fastenal drops 4.5% after weak earnings report
- Global markets mixed; China exports up 8.3% in September
Wall Street Rebounds After Trump Calms China Tensions
Deep Look
NEW YORK — Wall Street bounced back on Monday as investors regained confidence following President Donald Trump’s unexpectedly conciliatory remarks toward China, easing concerns over a potential escalation in trade tensions.
Markets had been reeling since Friday, when Trump’s aggressive rhetoric and tariff threats spooked investors. However, a sharp shift in tone over the weekend helped soothe nerves.
“Don’t worry about China,” Trump posted on his social media platform Sunday, adding, “The U.S.A. wants to help China, not hurt it!”
Trump also acknowledged Chinese President Xi Jinping’s reluctance to push his nation toward economic hardship, suggesting that both sides prefer cooperation over conflict.
This marked a dramatic reversal from Trump’s Friday statement, where he labeled China “a moral disgrace” over export restrictions on rare earth materials. At the time, he hinted at imposing an additional 100% tariff on Chinese goods by November 1 — a threat that rattled global markets.
Indexes Surge on Optimism
On Monday morning, the S&P 500 rose by 1.1%, clawing back nearly half of Friday’s losses, which marked its worst trading day since April. The Dow Jones Industrial Average gained 413 points (0.9%), while the Nasdaq Composite jumped 1.3%.
The market’s dramatic ups and downs echo April’s volatility, when Trump announced sweeping global tariffs on “Liberation Day,” only to soften the stance later, allowing space for trade negotiations. A similar pattern appears to be unfolding, with investors now hopeful that talks between the U.S. and China may resume in earnest.
According to Morgan Stanley analysts, led by Michael Wilson, a continued easing of trade tensions could allow markets to maintain a gradual recovery into 2026 — particularly if corporate earnings hold steady and interest rates remain supportive.
Risk Remains: Overvaluation and Earnings in Focus
Despite the rebound, analysts warn that the market may still be overextended. The S&P 500 has gained roughly 35% since its April lows, pushing stock prices to levels some view as unsustainable without corresponding profit growth.
Critics argue that stock prices, especially in the high-flying artificial intelligence sector, have outpaced fundamentals. Pessimists warn of parallels to the dot-com bubble of the early 2000s, suggesting a market correction may still be looming unless companies deliver strong earnings results.
The upcoming earnings season is, therefore, critical. Major corporations such as JPMorgan Chase, Johnson & Johnson, and United Airlines are set to report results this week, which could significantly influence investor sentiment.
One early disappointment came from Fastenal, which saw its stock drop 4.5% after reporting earnings that fell short of analyst expectations — one of the worst performances in the S&P 500 on Monday.
Global Markets Mixed Amid China Export Growth
While U.S. stocks rebounded, global markets showed mixed signals. European indexes posted moderate gains, while Asia saw continued weakness.
- Hong Kong’s Hang Seng Index fell 1.5%
- Shanghai Composite dropped 0.2%
However, there was some good news out of China: the country’s exports rose 8.3% in September compared to the same month last year — the strongest growth in six months. Analysts say this may reflect a strategic shift by Chinese manufacturers toward alternative markets outside the U.S.
This export resilience has the potential to buffer China’s economy amid ongoing trade tensions, though questions remain about the long-term sustainability of such a strategy.
Investor Outlook: Uncertainty Still Lingers
Investors are cautiously optimistic, but the recent swings underscore how sensitive markets remain to Trump’s unpredictable policy announcements.
The combination of trade uncertainty, high valuations, and geopolitical instability keeps Wall Street on edge. However, should the U.S. and China continue toward de-escalation, and corporate earnings surprise to the upside, markets may yet find footing heading into 2026.
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