U.S. stocks roared back Monday, marking the S&P 500’s biggest rally since May, as investors piled back into risk assets following signs of thawing tensions between Washington and Beijing, and a massive new AI chip deal between OpenAI and Broadcom.
Stocks Rebound After Trump’s Calmer Tone
After Friday’s $2 trillion wipeout triggered by Trump’s tariff threats, Wall Street staged an emphatic comeback. The Dow Jones Industrial Average jumped nearly 600 points (+1.3%), the S&P 500 gained 1.6%, and the Nasdaq Composite surged 2.2%, led by a rebound in tech and semiconductor names.
The rebound came after President Trump wrote on Truth Social that relations with China “will all be fine,” saying he respected Chinese President Xi Jinping and adding, “The U.S.A. wants to help China, not hurt it.”
The shift in tone, echoed by Vice President JD Vance, who said negotiations remain possible, eased fears of a full-scale trade escalation that had roiled markets late last week.
“Trump seems to be telling investors they can safely buy the dip,” said Wolfe Research’s Tobin Marcus. “Given their track record this year, they probably will.”
AI Stocks Ignite the Rally
AI optimism returned in full force after Broadcom (AVGO) announced a multiyear, 10-gigawatt chip partnership with OpenAI to build custom AI accelerators and networking systems.
Broadcom shares soared nearly 10%, while Nvidia (NVDA) climbed 3% and AMD (AMD) added 1%.
The Philadelphia Semiconductor Index rose almost 5%, its best day in months.
Bloom Energy (BE) skyrocketed 27% after Brookfield pledged $5 billion to deploy its fuel cell systems in AI data centres. Other AI-linked plays, including ON Semiconductor, also surged.
Commodities and Crypto Jump
Safe-haven assets climbed alongside equities.
Gold hit a new record high at $4,125 an ounce, while oil rose 1.3% to $59.65 per barrel. Bitcoin rebounded to $115,900, recovering sharply from weekend lows near $107,000 amid renewed optimism that a prolonged trade war might be avoided.
Outlook: Earnings, Shutdown, and China
Despite the relief rally, risks remain. The U.S. government shutdown stretches into another week ahead of the October 15 payroll deadline, and major banks, including JPMorgan, Goldman Sachs, and Morgan Stanley, are set to kick off Q3 earnings on Tuesday.
Analysts warn the rebound may hinge on whether Trump’s softer rhetoric translates into concrete action before the November 1 tariff deadline.
After weeks of turmoil, Wall Street finally exhaled, revived by AI euphoria and a hint of diplomatic calm. But with the shutdown ongoing and tariff threats still on the table, investors know this bull run could face another test before the month’s end.
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