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U.S. stock futures jumped on Monday, signaling a strong rebound after last week’s selloff, as investors took comfort in a more conciliatory tone from President Donald Trump following his earlier tariff threats against China.
By 10:30 GMT, Dow futures had risen 1.0% (433 points), S&P 500 futures gained 1.3% (87 points), and Nasdaq 100 futures surged 1.9% (453 points), pointing to a recovery led by technology and AI-linked stocks.
Markets Rebound as Trump Strikes Softer Tone
Wall Street ended sharply lower on Friday after Trump’s social media posts revived fears of a full-blown trade war between the U.S. and China. The selloff followed Beijing’s decision to expand export controls on rare earth materials, prompting Trump to threaten 100% tariffs on Chinese goods and tighter export restrictions on “critical software” by November 1.
However, over the weekend, Trump appeared to tone down his rhetoric, writing that “everything will be fine” and emphasizing that the U.S. “does not want to hurt China.” The shift in tone helped ease investor anxiety and triggered a risk-on rebound in futures trading.
Nonetheless, they warned of lingering risks: “Both sides may dig in their heels, expecting the other to fold first. While China’s economy has proven resilient to tariffs, a deeper rift could still pose significant downside risks.”
Beijing, for its part, defended its export curbs as a “necessary reaction to U.S. aggression” but stopped short of announcing fresh duties, a move that analysts say may indicate room for de-escalation.
AI Optimism and Rate Cut Hopes Support Valuations
Beyond trade developments, U.S. equities continue to draw strength from AI enthusiasm and rate-cut expectations. Optimism surrounding artificial intelligence has been one of the main drivers of the 2025 market rally, with investors betting that productivity gains will support long-term corporate growth.
Cloud computing leader Oracle will host a major AI event in Las Vegas this week, while key semiconductor firms ASML and TSMC are scheduled to report earnings — both seen as barometers for AI-driven demand.
Earnings Season and Shutdown Uncertainty
The start of Q3 earnings season will also be in focus, beginning with major U.S. banks later this week. Investors will watch for corporate commentary on credit conditions, consumer health, and business investment amid delayed government data caused by the ongoing federal shutdown.
The lack of official economic indicators has made corporate earnings one of the few real-time gauges of U.S. economic momentum. Analysts expect moderate earnings growth, driven by the technology and financial sectors, while industrials may face margin pressures from global trade disruptions.
Outlook
Market sentiment has stabilized for now, but volatility could return quickly if the U.S.-China narrative shifts again. Investors are balancing hopes for monetary easing and AI-driven growth against the risk of renewed trade frictions.
