On Sunday, President Trump took to the social media platform Truth Social to make conciliatory remarks. Following his statement, the futures of the three major US stock indexes saw significant gains, bouncing back from a sharp decline on Friday. Under Trump’s reassurance, market sentiment has stabilized.
On Sunday evening, Dow Jones Industrial Average futures rose 358 points, up 0.8%. S&P 500 futures and Nasdaq 100 futures also rose 1% and 1.2% respectively.
Last Friday, in response to the rare earth restrictions imposed by the CCP globally, Trump announced plans to impose a 100% tariff on all Chinese goods in addition to the existing tariffs, and to implement export controls on critical software. The escalating US-China trade war caused a scare in the already overvalued market, leading to a comprehensive sell-off of US stocks, resulting in a $2 trillion market value evaporation. The S&P 500 index fell by 2.7% in a single day, marking the largest drop since April.
However, Trump’s post on Truth Social over the weekend served as a turning point for market sentiment. Wall Street futures responded with a rebound, indicating signs of stabilization in the risk sentiment.
In the post, Trump wrote that the US does not want to “harm” China, leading observers to believe that tensions between the US and China may ease.
“Don’t worry about China, everything will be fine,” Trump wrote in the post, suggesting that the CCP leader Xi Jinping has just “gone through a bad time.”
“He doesn’t want to see his country go into a recession, and neither do I. America wants to help China, not harm it!!” Trump stated.
Vice President Vance also echoed Trump’s remarks, saying that if Beijing is “willing to be reasonable,” the US is willing to negotiate, while emphasizing that the US has “far more chips” if not.
Goldman Sachs’ Chief Economist Jan Hatzius predicted that the most likely scenario is to “extend the current tariffs until after November 10, with both sides making some new, but limited, concessions.” However, he did not rule out the possibility of tariff increases and further export restrictions in the short term.
During last Friday’s drop, many tech companies suffered severe sell-offs due to their dependence on China’s rare earth supply chain. In Sunday’s turnaround, Nasdaq 100 futures, mainly driven by the tech sector, led the rebound.
Dan Ives, Managing Director of Global Technology Research at Wedbush Securities, wrote in a memo on Sunday, “As investors fear that the US-China situation could have a significant impact on the ‘AI revolution,’ bringing us back to the dark days of April, tech stocks became the focus in this wave of selling.”
Ives assessed that the current US-China trade war may be more about “posturing than substance,” expecting a potential meeting between Trump and Xi in the coming weeks, with the threat of tariffs possibly dissipating.
Beyond the US-China trade war, the market also faces multiple risks and key events. First, this week will kick off earnings season with financial stocks, including JPMorgan Chase, Goldman Sachs, Wells Fargo, and Citigroup, among other major banks reporting quarterly earnings on Tuesday and Wednesday.
According to data from IBES under the London Stock Exchange Group (LSEG), S&P 500 constituent companies are expected to see an 8.8% year-on-year increase in third-quarter overall profits. In an overvalued environment, strong performance will be essential for rationalizing valuations.
On Tuesday, Federal Reserve Chairman Jerome Powell is set to speak on the economic outlook at the National Association for Business Economics (NABE) annual conference, providing guidance to the market. Currently, the market has placed a 98% probability of rate cuts in October and December each.
Several other Federal Reserve officials are also scheduled to give speeches this week, with the International Monetary Fund (IMF) and World Bank holding meetings in Washington, where central bankers from around the world will be in attendance.
Furthermore, the US government shutdown continues, with October 15 being the next payday for most federal employees, and potentially the first time many may not receive a paycheck.
Political factors are also casting shadows over Europe. The French presidential palace announced the new cabinet list of Prime Minister Le Cornu on Sunday, with Macron’s close ally Roland Lescure retaining the position of finance minister.
Le Cornu’s previous cabinet lasted only 14 hours. He faces the daunting task of pushing through the 2026 budget in a heavily divided parliament.
On Monday, many world leaders, including President Trump, will meet in Egypt to discuss a ceasefire plan in Gaza. The ongoing conflict that has lasted over two years continues to be a matter of continuous global attention as to whether it can reach a resolution.