US Stocks Rebound as Trump Softens Trade Rhetoric – But for How Long?

U.S. stock futures jump after Trump backs off 100% China tariff threat, fueling optimism. What’s next for markets amid shutdown and bank earnings season?

Futures Rebound After Tariff Retreat

U.S. stock futures climbed sharply on Monday morning as investors reacted to more conciliatory remarks from President Trump, which tempered the aggressive tariff rhetoric from his administration last Friday.
Dow futures rose about 0.9%, S&P 500 futures up 1.3%, and Nasdaq-100 futures soared 1.8%. 

The shift came after Trump posted on Truth Social: “Don’t worry about China, it will all be fine!” He later suggested that while tariffs of 100% on Chinese goods effective November 1 remain his plan, there is room for negotiation before then. 

From Plunge to Reprieve: What Drove Friday’s Crash?

On Friday, U.S. markets saw a dramatic sell-off, erasing approximately $2 trillion in equity value. The sharp drop was triggered by Trump’s announcement of massive new tariffs on China in response to Beijing’s export restrictions on rare earths and other strategic materials.

Indices plunged: the Dow declined ~1.9%, S&P 500 fell ~2.7%, and Nasdaq dropped ~3.6%. The broader market pain reflected fears of renewed escalation in the U.S.–China trade war.

What’s Ahead: A Volatile Week on Tap

1. Government Shutdown Lingering

The U.S. federal government shutdown continues into another week, creating uncertainty over federal operations and economic data releases. If unresolved by October 15, many federal workers risk missing paychecks, adding to market nerves.

2. Heavyweight Earnings Come Into View

Earnings season kicks off with major U.S. banks reporting: JPMorgan, Goldman Sachs, Wells Fargo, Citigroup, Bank of America, Morgan Stanley are scheduled to release results on Tuesday and Wednesday. Analysts expect profits for these banks to rise ~6% year-on-year.

These earnings will be a key test of market tone and will influence sentiment across financial stocks and lending sectors.

3. Monitoring Trade, Tariff & China Developments

Markets will closely watch diplomatic signals between the U.S. and China. Any renewed escalation or walkback could make or break the current optimism.

4. Macro Data & Fed Positioning

With the shutdown stalling many data releases, markets will lean heavily on whatever economic indicators are published. Investors will also scrutinize statements from the Federal Reserve, especially in the absence of regular updates.

Market Implications & Strategy Thoughts

Short-term bounce possible: The softened rhetoric gives markets a reprieve, and bargain hunters may push equities higher in early trade.

Volatility risk remains elevated: Sentiment is fragile; a reversal or renewed trade hawkishness could reignite selling pressure.

Selective sectors may lead: Tech and semiconductor names, sensitive to U.S.–China policy, may rebound sharply.

Interest rate backdrop still pivotal: If the Fed signals upward pressure or delays easing, equities could feel the pinch again.

Frequently Asked Questions (FAQ)

1. Why did stocks rebound so quickly after Friday’s crash?
Investors responded to Trump’s softened tone, viewing it as a signal that full-scale escalation might be avoidable — prompting relief buying in futures markets.

2. Are the 100% tariffs on China still on the table?
Yes, Trump maintains they are “still the plan,” but has left open the possibility of negotiation before the November 1 deadline. MarketWatch+1

3. How does the government shutdown affect the markets?
It dampens economic visibility, delays key reports, and increases policy risk — all factors that amplify market uncertainty, especially if it drags on.

4. What should investors watch closely this week?
Main focus areas: bank earnings for clues about the economy; any move on U.S.–China trade; Fed commentary; and signs of renewed risk flows in or out of equities.