Sharp Rebound After Friday’s Sell-Off
US stocks staged a powerful comeback on Monday, recovering much of the ground lost in last week’s steep decline. The S&P 500 gained 1.56%, the Dow Jones rose 1.29%, and the Nasdaq 100 advanced 2.18%. Futures also climbed sharply, signaling renewed investor confidence.
The rally followed a shift in tone from the Trump administration, which indicated a willingness to resume trade talks with China. Just days earlier, markets had tumbled after President Trump threatened 100% tariffs on Chinese goods and export restrictions on US software. The softer stance quickly lifted risk appetite across global markets.
Artificial Intelligence Back in the Spotlight
Tech stocks led the surge, with chipmakers posting some of the biggest gains. Broadcom soared more than 9% after announcing a multi-year partnership with OpenAI to develop custom chips and networking equipment. The collaboration could boost AI data center capacity by 10 gigawatts, sparking a wave of buying across the semiconductor sector.
ARM Holdings jumped 11%, ON Semiconductor gained 9%, while Micron, Microchip, and ASML rose between 5% and 6%. The “Magnificent Seven” tech giants also rebounded: Tesla advanced 5%, Alphabet climbed 3%, and Nvidia and Amazon gained more than 2%.
Fed Signals and Monetary Policy Outlook
Comments from the Federal Reserve added to the bullish mood. Philadelphia Fed President Anna Paulson said she supports two additional rate cuts this year, noting that tariff-driven price increases are unlikely to fuel lasting inflation.
Futures markets are pricing in a 98% chance of a 25-basis-point rate cut at the upcoming FOMC meeting on October 28–29. Expectations for monetary easing continue to underpin equity valuations, even as the ongoing government shutdown delays key economic reports.
Gold Rally and Strength in Commodities
Gold surged more than 3% to a new all-time high amid growing expectations of lower rates and central bank demand. The rally reflected heightened geopolitical risks and investor flight to safety. Mining stocks followed suit — Newmont, Freeport-McMoRan, and Coeur Mining each gained between 4% and 8%.
Rare Earth Stocks and Supply Chain Shifts
Tensions between the US and China over rare earth exports ignited a rally among alternative suppliers. Critical Metals soared 53%, MP Materials rose 21%, and Ramaco Resources climbed 11%, as investors bet on new opportunities for non-Chinese producers of strategic minerals.
Earnings Season Begins
Investors are also turning their attention to the Q3 earnings season, which kicks off Tuesday with reports from major banks including JPMorgan, Goldman Sachs, Citigroup, and Wells Fargo. According to Bloomberg Intelligence, 22% of S&P 500 companies expect to beat analyst forecasts — the highest share in a year — although overall earnings growth is projected to slow to 7.2%, the weakest in two years.
Despite the slowdown, markets remain optimistic that a resilient US economy, strong corporate investment in AI, and a dovish Fed will keep the rally alive through October.
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