Blog

Stocks jumped to new records on Monday after U.S. and China officials cooled tensions over the weekend, laying the groundwork for President Donald Trump and China President Xi Jinping to clinch a trade deal this week.

The Dow Jones Industrial Average rallied 230 points, or 0.5%. The S&P 500 climbed 0.9%, while the Nasdaq Composite was up 1.5%, bolstered by a rise in chip stocks like Nvidia. All three major averages had notched fresh all-time intraday highs in the session.

“I think we have a very successful framework for the leaders to discuss on Thursday,” said Treasury Secretary Scott Bessent from the ASEAN Summit in Kuala Lumpur.

The framework potentially includes a delay of China’s rare earths restrictions that caused the latest trade flare-up, a spiking of Trump’s threatened 100% tariffs on China that were to start Nov. 1 and a resumption of Chinese purchases of soybeans. The agreement may include a resolution of the TikTok dispute with the U.S. getting a deal for the U.S. version of the social video app.

“I have a lot of respect for President Xi, and we are going to come away with the deal,” Trump said on Monday from Air Force One.

Chipmakers, the sector with the most to lose from tensions with China, supported the rally Monday. Nvidia rose about 2%, while Broadcom gained nearly 1%. Tesla and Apple also added around 3% and 1%, respectively, with the latter nearing $4 trillion in market cap.

Qualcomm rose to a new high after the company announced new artificial intelligence chips, putting it in competition with Nvidia and AMD. The stock was last up almost 20%.

“Details are still limited, and nothing will be finalized until the Trump-Xi meeting, but a renewed truce now seems near-certain, with China likely fully delaying their rare earth export controls for a year—better than the alternative of an agreement to grant licenses,” said Tobin Marcus of Wolf Research in a note. “This overall better-than-expected outcome should be bullish for markets this week, assuming the Trump-Xi meeting goes well.”

Stocks are coming off a bullish week, with all three major indices hitting record highs last Friday. The Dow Jones Industrial Average posted its first-ever close above the 47,000 mark. The S&P 500 touched 6,800 for the first time ever Friday. All three major benchmarks posted their second week in a row of gains.

Investors expect the Federal Reserve to slash rates on Wednesday, particularly after the Bureau of Labor Statistics released slightly cooler-than-expected inflation data last week. Big Tech companies’ upcoming earnings reports are also on tap. Several “Magnificent Seven” stocks, including Alphabet, Amazon, Apple, Meta Platforms and Microsoft, will release their third-quarter results this week.

While investors were encouraged by improving China-U.S. relations, a setback with Canada kept their enthusiasm in check. Trump on Saturday put an additional 10% tariff on Canada imports for not pulling a TV ad featuring former President Ronald Reagan knocking tariffs fast enough.