MARKET SNAPSHOT

U.S. stocks bounced back from Friday's losses after comments from President Trump on Sunday eased fears of a renewed trade war with China. The dollar strengthened on the likelihood of fewer rate cuts in 2026, while gold and silver settled at record highs. Crude futures recovered some of Friday's losses. U.S. Treasury markets were closed in observance of a holiday.

MARKET WRAPS

EQUITIES

Tech shares led a broad market rebound Monday after comments from President Trump and senior administration officials over the weekend eased fears of a renewed U.S.-China trade war.

On Friday, the S&P 500 and Nasdaq Composite Index notched their worst day since April's tariff rout after Trump threatened China with a 100% extra tariff and new export controls. The comments sparked a selloff in the year's hottest big tech stocks, shares of regional banks and trade-sensitive sectors like autos and retail.

Then, Trump posted on social media over the weekend that "it will all be fine," and Vice President JD Vance said the U.S. is willing to negotiate with China. Stock futures climbed Sunday evening before giving way to Monday's rally.

The Nasdaq and the S&P 500 rose 2.2% and 1.6%, respectively, logging their best day since May. The Dow Jones Industrial Average added 1.3%.

Asian markets had a rocky start to the week as fresh Trump tariff threats rekindled worries about a U.S.-China trade war, sparking a sell-off across regional indexes.

Shares in Asia on Monday mirrored the drops seen in the U.S. Friday after President Trump threatened new trade restrictions on China. Beijing had previously announced sweeping curbs on exports of rare earths, a key point of conflict in negotiations.

In China, the Shanghai Composite Index declined 0.2%. The Shenzhen Composite Index ended 0.7% lower, and the ChiNext Price Index fell 1.1%.

Hong Kong's Hang Seng Index declined 1.5%.

Japan's market was closed for a holiday.

Australia stocks slipped, with the S&P/ASX 200 Benchmark Index declining 0.8%.

New Zealand's S&P/NZX 50 Index also fell, slipping 0.9%.

COMMODITIES

Crude futures recovered some of Friday's losses after President Trump softened his tone on China over the weekend.

Russian-Ukraine tension remained high, offering some upside, while prospects of oversupply kept a lid on rallies. Traders still expect trade with China to remain erratic until a deal is reached, "which could be a pressure point for crude near term," Dennis Kissler of BOK Financial said.

WTI settled up 1%, at $59.49, a barrel and Brent rose 0.9%, to $63.32 a barrel.

Gold and silver futures closed at fresh highs - with silver surpassing the record set in 1980.

Both posted strong gains to start the week, with front-month gold futures settling up 3.3% to $4,108.60 a troy ounce and silver surging 6.8% to $50.13 a troy ounce.

TODAY'S TOP HEADLINES

Federal Reserve Can Look Through Tariff-Driven Inflation, Fed's Paulson Says

Price increases driven by tariffs will likely prove temporary, according to Philadelphia Fed President Anna Paulson, who also threw her support behind further interest-rate cuts this year as the Fed responds to a slowing labor market.

Goods prices have risen since the Trump administration began implementing steep new tariffs earlier this year, Paulson said Monday in a speech to business economists in Philadelphia. But there is little evidence to suggest that it would spur a sustained cycle of rising prices across the economy, an observation backed up by economic models, she added.

"Here the lessons from economic theory are clear: So long as inflation expectations are anchored, increases in prices due to supply effects do not turn into an inflation problem," Paulson said. Her analysis aligns with that of Fed voters such as governors Christopher Waller and Stephen Miran, who have argued that the Fed should look past tariff effects as well.

Economists Are More Optimistic About Growth in the U.S.

The economic outlook has shifted considerably from earlier this year, with economists penciling in more growth and less inflation than previously expected.

In the wake of the aggressive tariffs announced in early April, economists across the country slashed expectations for growth and raised their forecasts of inflation considerably. But with consumers continuing to spend, in the aggregate, and uncertainty around trade policy starting to fade, there is more optimism that the U.S. economic engine will keep powering ahead.

Many economists forecast that the U.S. economy would shrink in the third quarter and that results for the fourth quarter would be below trend. That made sense because growth in the first quarter was dismal and the effective tariff rate was expected to exceed 20% this year.

OpenAI, Broadcom Forge Multibillion-Dollar Chip-Development Deal

OpenAI and Broadcom are working together to develop and deploy 10 gigawatts of custom AI chips and computing systems over the next four years, a high-profile partnership aimed at satisfying some of the startup's immense computing needs.

OpenAI plans to design its own graphics processing units, or GPUs, which will allow it to integrate what it has learned from developing powerful artificial-intellligence models into the hardware that underpins future systems. As part of the agreement announced Monday, the chips will be co-developed by OpenAI and Broadcom and deployed by the chip company starting in the second half of next year.

The new agreement will be worth multiple billions of dollars, people familiar with the matter said. The companies didn't disclose financial terms.

Banks Poised for Strong Third Quarter, But Yellow Flags on Consumer Health Loom

U.S. banks' third-quarter earnings should be in solid shape, buoyed by a wave of deal activity and strong capital positioning, but analysts caution that early signs of consumer stress could slow momentum as the year ends.

"Some of the indicators are flashing yellow at this point," Raymond James analyst Michael Rose said, citing upticks in consumer delinquencies and corporate bankruptcies. "While nothing is flashing red, these are all things we're keeping an eye on as potential headwinds for the sector."

The banking sector has rebounded since April, fueled by a surge in M&A and a favorable regulatory environment that has eased fees and streamlined examinations. Analysts expect these trends to support upbeat third-quarter results, with net interest margin expansion and fee-based businesses driving revenue growth.

Salesforce's $15 Billion Investment in San Francisco Will Support AI Innovation

Salesforce will invest $15 billion in San Francisco over the next five years, a move the company said will cement the city's status as a global hub for artificial intelligence.

The investment will fund a new AI Incubator Hub, expand workforce-development programs and help companies transform into "agentic enterprises," Salesforce said Monday. It comes as San Francisco's office market is showing signs of recovery after years of high vacancy rates and uncertainty.

"This $15 billion investment reflects our deep commitment to our hometown-advancing AI innovation, creating jobs, and helping companies and our communities thrive in this incredible new era," Chief Executive Marc Benioff said.

JPMorgan to Invest $10 Billion in U.S. Companies Critical to National Security

JPMorgan Chase said Monday that it would directly invest $10 billion in companies it deems critical to U.S. national security, part of an initiative to help protect the American economy as trade tensions with countries such as China escalate.

The bank said it had committed to facilitating $1.5 trillion in investments for companies deemed "critical to national economic security and resiliency" over the next 10 years. That includes the $10 billion of its own capital it plans to use to take stakes in companies such as defense contractors, mineral manufacturers and artificial-intelligence firms.