The S&P 500 Index ($SPX) (SPY) experienced a +1.56% increase on Monday, while the Dow Jones Industrials Index ($DOWI) (DIA) was up by +1.29%. The Nasdaq 100 Index ($IUXX) (QQQ) saw a significant rise, closing +2.18% higher. December E-mini S&P futures (ESZ25) advanced by +1.47%, alongside a +2.12% increase in December E-mini Nasdaq futures (NQZ25).
On Monday, stock indexes made a notable recovery from the losses suffered during Friday’s downturn. Markets showed resilience as the Trump administration softened its stance towards China. Semiconductor and AI infrastructure stocks also saw strong gains, with Broadcom surging over 9% following a multi-year partnership agreement with OpenAI to develop custom chips and networking solutions, potentially adding a substantial 10 gigawatts of AI data center capacity.
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Trading in cash Treasuries was halted on Monday in observance of the Columbus Day holiday. Meanwhile, the price of gold surged over 3%, reaching a new record high. This rally was fueled by strong demand from central banks, expectations for further rate cuts by the Federal Reserve, and a flight to safety amid concerns about the US government shutdown, potential threats to Fed independence, global trade tensions, and geopolitical risks.
Dovish remarks from Philadelphia Fed President Anna Paulson on Monday, who indicated her preference for two more quarter-point rate cuts this year, provided reassurance for the stock market. She noted that current conditions do not suggest that price increases due to tariffs will turn into sustained inflation.
On Sunday, the Trump administration expressed a willingness to negotiate a trade deal with China to alleviate existing trade tensions. last Friday’s market drop followed President Trump’s threat of imposing 100% tariffs on Chinese products and limiting US software exports, starting November 1, in response to China’s constraints on the export of rare earth materials and related technologies.
Recent trade data from China exceeded expectations, presenting an optimistic view for global economic growth and serving as a bullish indicator for the stock market. China’s exports for September rose by +8.3% year-on-year, surpassing predictions of +6.6%, marking the largest increase in six months. Additionally, September imports climbed by +6.4% year-on-year, exceeding expectations of +1.8%, representing the highest rise in 17 months.
