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Investing.com - The S&P 500 closed sharply higher Monday, rebounding from Friday’s slump as a conciliatory tone from President Donald Trump eased fears of a U.S.-China trade war.
At 4:00 p.m. ET (20:00 GMT), the benchmark S&P 500 was up 1.6%, the tech-heavy Nasdaq Composite gained 3.2%, and the blue-chip Dow Jones Industrial Average jumped 588 points, or 1.3%.
Trump cools stance on China ahead of meeting
Trump appeared to adopt a less strident stance on China, saying over the weekend that everything would be "fine" and that Washington was not looking to "hurt" China.
The remarks pointed to a de-escalation of US-China trade tensions, which were dealt a blow on Friday following a social media posts from Trump which revived fears over a widespread trade war between the world’s two largest economies.
Beijing, at the same time, backed its export curbs on rare earth elements and equipment as a necessary reaction to U.S. aggression, although it did not place new duties on U.S. items.
"This latest dispute could still blow over if cool heads prevail," analysts at Capital Economics argued in a note, adding that the planned meeting between Trump and Xi could provide "an off-ramp."
"But there is clearly a risk that both sides may dig in their heels, expecting their opponent to fold first. While China’s economy has proven more resilient in the face of U.S. tariffs than many had feared, there is still significant potential downside from a deeper rift with the U.S."
Following Beijing’s announcement of expanded export controls on some rare earth materials, which serve critical roles across a host of industries, Trump said he would place additional levies of up to 100% on U.S.-bound goods incoming from China.
He also warned of new U.S. export controls on "any and all critical software" by November 1, and suggested that there was no longer a reason to meet with Chinese counterpart Xi Jinping at a highly-anticipated summit in South Korea later this month. However, the planned gathering has not been scrapped.
Trump’s statements refueled market concerns over the risks posed by possibly escalating international tariffs, following a relatively quiet period for trade tensions since a tentative detente between the U.S. and China earlier this year.
Along with the trade volleys lobbed between the U.S. and China, markets are also keeping close tabs on an ongoing surge in enthusiasm around artificial intelligence, which, along with hopes for lower interest rates, have helped to push equity valuations up to elevated levels.
Broadcom, Oracle jump as chip stocks recover ground
Shares of Broadcom rallied 10% after the designer of customer AI chips and ChatGPT-maker OpenAI announced that they are working to jointly develop and deploy 10 gigawatts of custom AI accelerators and computing systems. The multi-year partnership will see OpenAI design the accelerators, while Broadcom will handle development and deployment. The companies have signed a term sheet for deploying racks incorporating the AI accelerators and Broadcom’s networking solutions, with deployment targeted to begin in the second half of 2026 and complete by the end of 2029.
Cloud software giant Oracle is also due to hold a much-anticipated AI event in Las Vegas this week, while earnings are due out from big-name semiconductor players ASML and TSMC in the coming days.
In other news, Warner Bros Discovery Inc (NASDAQ:WBD) jumped after after Bloomberg, citing people familiar with the matter, reported that the company had rejected Paramount Skydance’s proposed buyout of roughly $20 a share, potentially the latter’s to consider a range of options including an improve bid or a hostile takeover.
Bank earnings are set to be unveiled as well, in what is typically the start of the quarterly corporate reporting period. Any broader economic commentary from some of Wall Street’s biggest lenders would likely be homed in on by investors, who have faced a dearth of official indicators during a federal government shutdown that has shown little sign of ending soon.
Gold’s new high
Gold prices jumped to fresh record highs on Monday, with futures of the yellow metal exceeding the $4,100-per-ounce mark, as renewed U.S.-China trade tensions boosted demand for safe-haven assets.
Spot gold rose 2.3% to $4,109.79 per ounce by 4:00 am ET. U.S. gold futures climbed 2.9% to $4,128.85 following the president’s threat to slap steep new tariffs on China./oz. Silver also hit an all-time high, riding the momentum in precious metals.
Bullion prices spiked after Trump ratcheted up trade tensions on Friday, unsettling financial markets and sending investors pouring into safe-haven assets including gold. The yellow metal is typically viewed as a bastion for investment during times of economic or political uncertainty.
While Trump’s shift in tone has helped to calm some nerves, traders have remained wary of unpredictable policy changes from the White House.
(Scott Kanowsky contributed to this report)