Dow gains almost 600 points after US-China trade showdown hits the pause button
By John Liu, John Towfighi, CNN
New York/Hong Kong (CNN) — US stocks rebounded sharply on Monday after Friday’s widespread sell-off as investors tried to temper their concerns about renewed US-China trade tensions.
The Dow rose 588 points, or 1.29%. The S&P 500 gained 1.56%. The tech-heavy Nasdaq Composite rose 2.21%.
The S&P 500 and Nasdaq were coming off of their worst day since April. The S&P 500 on Friday shed $1.56 trillion in market value, according to FactSet data.
Stocks clawed back some of those Friday losses. The S&P 500 on Monday posted its biggest single-day gain since May and recouped roughly $872 billion in market value. The Nasdaq also had its best day since May.
The concerns about a trade spat come after President Donald Trump on Friday threatened to impose new triple-digit tariffs on Chinese imports.
Sentiment on Wall Street recovered in part after Trump posted on social media on Sunday: “Don’t worry about China, it will be all fine!” The positive momentum gained steam Monday after Treasury Secretary Scott Bessent said trade talks between US and Chinese negotiators went into overdrive over the weekend, and Trump’s high-stakes meeting with Chinese leader Xi Jinping would likely still take place later this month. Trump on Friday suggested it might be off.
“While our base case remains that sentiment will continue to improve as both sides work towards a new arrangement, there’s clearly a risk that tensions and volatility remain high for a while yet,” Thomas Matthews, head of Asia Pacific markets at Capital Economics, said in a note.
Gold and silver surged higher as investors continued to seek out safe havens amid lingering uncertainty. Gold and silver futures rose 3.1% and 7%, respectively. Silver futures traded in New York hit their first record high since 1980.
Bitcoin, which had swiftly dropped on Friday, recouped some of its losses and traded around $115,900.
Asian stocks stumble
Major stock markets across Asia Pacific region sank earlier Monday amid mounting fears of a renewed trade war between the world’s two largest economies.
Trump’s threat followed Beijing’s tightening of its control on rare earths, a group of critical minerals essential in the production of a wide range of electronics, automobiles and semiconductors. China dominates the global rare earth supply chain.
Those restrictions came after the US introduced a slew of its own export controls targeting China in late September, despite the two sides seemingly making progress in trade talks over the summer.
China’s sweeping new restrictions, some of which won’t take effect until November, could deal a huge blow to East Asian economies, such as Japan, South Korea and Taiwan, which play critical roles in the global tech and artificial intelligence supply chain, as well as the auto industries.
On Monday, key Asian stock indexes closed lower. Hong Kong’s benchmark Hang Seng index, dominated by Chinese financial and tech firms, closed 1.52% down. China’s Shanghai composite index fell 0.2%. South Korea’s benchmark index KOSPI lost 0.72%. Australia’s S&P/ASX 200 dropped 0.84%.
The Tokyo stock exchange was closed Monday for a public holiday.
Trump appeared to have been caught off guard by what he called China’s latest “hostile” move and on Friday said he would impose an additional 100% tariff on Chinese goods starting November 1, immediately reigniting the prospect of a damaging trade war.
The new tariff would raise total duties on imports from China to around 130% — effectively a trade embargo and just shy of the 145% peak reached at the height of the trade war this spring.
The rapid escalation of trade tensions sank US stocks Friday. The Dow suffered its steepest one-day drop since May.
On Sunday, Beijing fired back, vowing countermeasures if Trump makes good on his threat. China’s commerce ministry said the country is “not afraid” of a trade war, but urged further negotiations between the two sides to resolve the issues.
The ministry also defended the new rules on rare earths as a “legitimate move” and blamed Washington for the latest escalation, pointing to the Trump administration’s introduction of a series of new restrictive measures against China within two weeks of the latest round of trade talks in Madrid in September.
But the Trump Administration has appeared to soften its tone, opening doors for further talks.
In a Trust Social post on Sunday, Trump said the US “wants to help China, not hurt it.”
While he said “Don’t worry about China, it will be all fine!,” he did not give further indication on what he meant specifically. US stock futures rose Sunday evening after Trump’s comment.
In Europe, most stock indexes slightly gained. Germany’s DAX rose 0.6%, and France’s CAC gained 0.2%.
Equity strategists at Morgan Stanley led by Michael Wilson said in a note that unless there is continued de-escalation in US-China trade tensions, the US stock market could see a larger than expected drop.
“If associated trade uncertainty/volatility continue into early November, we could see a larger correction than most are expecting,” the strategists wrote.
Meanwhile, Vice President JD Vance appealed to China to “choose the path of reason,” while emphasizing that the US holds “far more cards” if Beijing chooses to respond aggressively.
“It’s going to be a delicate dance, and a lot of it is going to depend on how the Chinese response,” Vance said on Fox News Sunday.
This story has been updated with market developments.
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CNN’s Auzinea Bacon and Olesya Dmitracova contributed reporting.
