Wall Street rallies to recover some of Friday's sell-off after Trump softens his criticism of China

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NEW YORK (AP) — And back up goes Wall Street. U.S. stocks are rallying Monday after President Donald Trump said “ it will all be fine,” just days after he sent the market reeling by threatening much higher tariffs on China.

The S&P 500 jumped 1.4% to recover roughly half of its drop from Friday, which was its worst since April. The Dow Jones Industrial Average was up 473 points, or 1%, as of 10:15 a.m. Eastern time, and the Nasdaq composite was 2% higher.

“Don’t worry about China,” Trump said on his social media platform Sunday. He also said that China’s leader, Xi Jinping, “doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!”

It was a sharp turnaround from the anger Trump displayed on Friday, when he accused China of “ a moral disgrace in dealing with other Nations." He pointed to “an extremely hostile letter” describing curbs to China's exports of rare earths, which are materials used in the manufacturing of everything from personal electronics to jet engines. Trump said at the time that he may place an additional 100% tax on imports from China starting on Nov. 1.

For its part, China urged the United States to resolve differences through negotiations instead of threats. “We do not want a tariff war but we are not afraid of one," the Commerce Ministry said in a statement posted online.

Hours later, Trump posted his less confrontational talk about China on Truth Social. The backtrack in anger, which also came before trading began on Wall Street, raised hopes that the world’s two largest economies may find a working relationship that allows global trade to continue.

The market’s big moves bracketing the weekend echo its manic swings in April. That's when Trump shocked investors with his “Liberation Day” announcement of worldwide tariffs, only to eventually relent on many to give time to negotiate trade deals with other countries.

If this time ends up similarly, with trade tensions and uncertainty subsiding, potentially even after a sharp drop for stock prices, conditions could allow for a rolling recovery to continue into 2026, according to Morgan Stanley strategists led by Michael Wilson.

To be sure, the U.S. stock market may have been primed for a drop and was perhaps just looking for a potential trigger.

It was already facing criticism that prices had shot too high following the S&P 500’s nearly relentless 35% run from a low in April. The index, which dictates the movements for many 401(k) accounts, is still near its all-time high set last week.

Not only did Trump's backdown from tariffs in April help launch stock prices, so did expectations for several cuts to interest rates by the Federal Reserve to help the economy.

Critics say the market looks too expensive now after prices rose much faster than corporate profits. Worries are particularly high about companies in the artificial-intelligence industry, where pessimists hear echoes of the 2000 dot-com bubble that imploded. For stocks to look less expensive, either their prices need to fall, or companies’ profits need to rise.

That’s raising the stakes in the upcoming earnings reporting season for U.S. companies, which are set to say how much profit they made during the summer. JPMorgan Chase, Johnson & Johnson and United Airlines are some of the big names on the calendar this upcoming week.

Fastenal tumbled 3.8% after the maker of fasteners and safety supplies reported on Monday a profit for the latest quarter that was slightly weaker than analysts expected.

At Bank of America, strategist Savita Subramanian is optimistic that companies across the S&P 500 can deliver a bigger overall profit than analysts expected. Besides reports showing a resilient U.S. economy, she also pointed to the benefits of the U.S. dollar's weakening against other currencies for big U.S. companies, which increases the value of their sales made overseas, in a BofA Global Research report.

In stock markets abroad, indexes edged up in Europe following losses in Asia, which had their first opportunity to react to Trump's initial threat from Friday of additional tariffs on China.

Stocks fell 1.5% in Hong Kong and 0.2% in Shanghai. China reported its global exports rose 8.3% in September from a year earlier, the strongest growth in six months and further evidence that its manufacturers are shifting sales from the United States to other markets.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.