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(Bloomberg) — Wall Street traders lifted stocks as the US and China signaled willingness to keep trade negotiations alive, Middle East tensions cooled while the artificial-intelligence rally powered ahead.

Following its worst rout in six months, the S&P 500 jumped about 1.5% to extend a bull market that’s already added $28 trillion to its value. The benchmark saw its best session since August. A key gauge of chipmakers surged 5%. Broadcom Inc. soared 10% as OpenAI agreed to buy its custom chips and networking equipment in a multiyear agreement.

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With trade jitters easing and investors brushing aside fears of a tech-fueled bubble, the market rebound showed that the buy-the-dip mentality remains firmly in place. That’s just ahead of the unofficial start of the US earnings season, with a barrage of reports from big banks Tuesday.

“Investors remain eager for exposure, and if this recovery holds, it will reinforce the idea that retail investors can’t be easily shaken and another reminder that buying the dip continues to work,” said Mark Hackett at Nationwide.

Risk appetite increased after President Donald Trump’s administration signaled openness to a deal with China to quell fresh trade tensions while China’s Ministry of Commerce urged further negotiations to resolve outstanding issues.

Sentiment was also buoyed as Trump visited the Middle East to celebrate a deal halting the war in Gaza and securing the release of prisoners held by Hamas. Trump said food and aid has begun to flow into Gaza, which has been devastated by the conflict.

Treasury futures edged mildly lower, with the US bond market closed for Columbus Day. The dollar rose 0.2%.

Wall Street’s biggest banks are poised for another strong quarter, buoyed by resilient trading desks and a rebound in deal activity. Bank stocks have surged in recent weeks on optimism that a milder regulatory environment under the Trump administration would jump-start corporate dealmaking and boost advisory revenue.

A record-setting surge in US stocks has traders approaching the start of corporate earnings season with little patience for companies that don’t meet the bar. Investors will also be looking for reassurance on a range of potentially thorny issues, from the durability of AI spending to how elevated tariffs are impacting companies.

“This earnings season is important to gauge the overall health of the bull market. Investors will closely examine technology earnings as AI and data center capex is increasingly being called into question in terms of how this spending may or may not be leading to profits,” said Richard Saperstein at Treasury Partners.

Meantime, equity analyst sentiment toward corporate profits is losing momentum at a time when US stocks are trading near record highs, suggesting the rally could face speed bumps this earnings season.

A Citigroup Inc. index tracking US earnings revisions — the number of analysts upgrading versus downgrading estimates — has turned flat for the first time since August. At the same time, the S&P 500 is trading around 22 times forward earnings, above the average over the past decade of nearly 19 times.

Investors should buy cheap stocks with the highest track record of beating both revenue and earnings expectations ahead of the third-quarter reporting season, according to a team of strategists led by Evercore ISI’s Julian Emanuel.

With the S&P 500 already at high valuation multiples and investors bracing for tariff negotiations between US and China, earnings reactions will likely be varied and violent for stocks, the strategists said.

The rally in US stocks is likely to pause if momentum in corporate profits fades in the third quarter, RBC Capital Markets strategists wrote in a note.

“If the strong sentiment around earnings that was seen in the last reporting season can’t be maintained, we think it will be difficult for the major indices to avoid a period of digestion in very near term,” the team led by Lori Calvasina said.

The bull market in US stocks saw its third anniversary on Sunday, but if history is any guide it needs to broaden out soon to keep running.

Of the 13 prior bull markets since World War II, seven completed a fourth year, with an average total gain of 88%. This one has essentially done that in three years, putting the S&P 500’s trailing price-to-earnings ratio at 25 — the highest ever for a bull market in its third year, said Wall Street veteran and CFRA chief investment strategist Sam Stovall.

Even as Stovall thinks the bull market has a good chance of celebrating its fourth birthday, history says it may be a volatile one, he noted.

“More generally, we think that the bull market will remain intact, so pullbacks should offer an opportunity for investors who are underallocated to equities to consider adding long-term exposure,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.

Bull markets that made it to year four have tended to perform very well during that year, according to Jeff Buchbinder and Adam Turnquist at LPL Financial.

For the seven bull markets since 1950 that lasted at least four years, the S&P 500 has, on average, gained 12.8% during the fourth year, they said. Six of the seven mature bull markets had positive year fours, with stocks falling during the fourth year of the first bull market after World War II that began in June 1949.

While this bull market has enjoyed a strong three years, history suggests it probably has more room to run, the LPL strategists noted.

“First, we need economic growth. Recessions kill bull markets, and thankfully, we don’t see one on the horizon. The Fed is in the middle of a rate-cutting cycle and inflation appears to be under control despite increased tariffs,” they concluded.

Corporate Highlights:

Broadcom Inc. shares jumped after OpenAI agreed to buy the company’s custom chips and networking equipment in a multiyear deal, part of an ambitious plan by the startup to add artificial intelligence infrastructure. As part of the pact, OpenAI will design the hardware and work with Broadcom to develop it, according to a joint statement on Monday. The plan is to add 10 gigawatts’ worth of AI data center capacity, with the companies beginning to deploy racks of servers containing the gear in the second half of 2026. Amazon.com Inc. plans to hire 250,000 workers during its peak season — unchanged from the previous two years — making the online retailer a standout in an otherwise bleak holiday labor market. Apple Inc. is bringing its superthin iPhone Air to China after a pause that allowed local carriers to prepare for the eSIM-only device. Exxon Mobil Corp. Chief Executive Officer Darren Woods renewed criticism of the European Union’s energy policies while praising US President Donald Trump’s approach. JPMorgan Chase & Co. vowed to funnel $1.5 trillion into industries that bolster US economic security and resiliency over the next 10 years — an initiative that will invest billions of dollars in companies and hire bankers and other professionals. Oracle Corp. will get a chance this week to reassure investors that a rally which has added roughly $370 billion to its market value this year is on stable footing. The software maker is hosting a four-day AI World conference starting Monday in Las Vegas, where much of the focus will be on Oracle’s cloud computing business. Beyond Meat Inc. tumbled after the troubled plant-based protein producer said nearly all creditors had accepted a debt swap that will lead to a substantial dilution of shareholders. Keurig Dr Pepper Inc. jumped after the Financial Times reported that Starboard Value had built a stake in the beverage company. Walt Disney Co. will air a six-part docuseries on the behind-the-scenes action of Taylor Swift’s Eras Tour, the highest-grossing concert tour of all time. First Brands Group’s Chief Executive Officer Patrick James has resigned from the company. James will be replaced by Charles Moore as interim CEO, according to a company statement. Jefferies Financial Group Inc. defended its dealings with First Brands Group and said its exposure to the bankrupt auto-parts supplier was small, as the investment bank sought to revive investor confidence after a sharp selloff in its stock. Douglas Lebda, the founder and chief executive officer of LendingTree Inc., died Sunday following an all-terrain vehicle accident. He was 55. Airbus SE is opening additional assembly lines in the US and China for its bestselling A320neo family as the company tries to reach production of 75 jets a month amid a massive backlog. Virgin Atlantic Airways Chief Executive Officer Shai Weiss will step down after a seven-year tenure marked by returning the UK airline to an annual profit. Brookfield will acquire the remaining parts of distressed-debt specialist Oaktree Capital Management it doesn’t already own, adding further heft to its credit business that’s emerged as a key driver of growth in recent years. Tata Capital Ltd. advanced in its Mumbai trading debut after the shadow lender wrapped up its 155-billion-rupee ($1.7 billion) initial public offering, India’s biggest this year. What Bloomberg Strategists say…

“In the absence of official data, what banks can say about credit card losses, loan losses, credit quality and the pulse of the consumer will go a long way toward filling the data void.”

– Edward Harrison, Macro Strategist, Markets Live. For the full analysis, click here.

Some of the main moves in markets:

Stocks

The S&P 500 rose 1.4% as of 2:58 p.m. New York time The Nasdaq 100 rose 2% The Dow Jones Industrial Average rose 1.1% The MSCI World Index rose 1% Bloomberg Magnificent 7 Total Return Index rose 2.2% Philadelphia Stock Exchange Semiconductor Index rose 4.7% The Russell 2000 Index rose 2.6% Broadcom rose 9.5% Currencies

The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.4% to $1.1568 The British pound fell 0.2% to $1.3333 The Japanese yen fell 0.7% to 152.31 per dollar Cryptocurrencies

Bitcoin rose 0.2% to $115,203.04 Ether rose 2.2% to $4,231.59 Bonds

Germany’s 10-year yield was little changed at 2.64% Britain’s 10-year yield declined two basis points to 4.66% Commodities

West Texas Intermediate crude rose 1% to $59.47 a barrel Spot gold rose 2.1% to $4,101.02 an ounce ©2025 Bloomberg L.P.