The main U.S. stock indices opened trading on October 13 with growth after a sharp collapse on Friday, October 10. The market was supported by Donald Trump's signals about the softening of trade rhetoric against China. This gave investors hope that the parties could still reach an agreement.

Details

- The main U.S. stock index S&P 500 after the opening of trading on October 13 rose by about 1.2%. For comparison, it ended October 10 trading with a 2.7% decline, which was the strongest drop since April.

- The blue-chip index Dow Jones Industrial Average added about 0.8%. At the end of Friday's trading session, the Dow fell by 1.9%.

- The Nasdaq Composite index, focused on the technology sector, grew by 1.8%. At the close of the last trades, it collapsed the most - by 3.6%.

- All shares of the "Magnificent Seven" technology giants also rose in price immediately after the opening. Apple's shares were up about 0.8%, Tesla 's shares - more than 2%, Nvidia 's shares jumped by almost 3%, Alphabet 's - by 1.6%, and Meta, Amazon and Microsoft 's shares - grew by almost 1% each.

Risk assets have started to recover amid US President Donald Trump's softening rhetoric following his threats to raise duties on Chinese goods by 100% in response to Beijing's new export restrictions, Bloomberg notes. In a post on the Truth Social platform published on Sunday, the US president wrote: "Don't worry about China, everything will be fine". He also called Chinese President Xi Jinping an "extremely respected leader" and added that neither Xi nor Trump want a "depression" for China. "The U.S. wants to help China, not hurt it!", Trump noted.

"There is emerging confidence that this is all largely a negotiating tactic on both sides," said Deutsche Bank head of macro research Jim Reed. - When the initial shock settles, the market will start to build into prices the likelihood of a deal being reached."

What's next

Prominent Wall Street techno-optimist Wedbush analyst Dan Ives believes the situation won't escalate into a new phase of the trade war. "The bark will prove louder than the bite," he noted in a note available to OnInvest. Wedbush saw Friday's selloff as a buying opportunity - especially in semiconductors and AI-related stocks - rather than a threat. The analyst acknowledged that volatility could persist, but emphasized that the fundamental outlook remains strong as demand for AI infrastructure and computing power continues to grow and the largest corporations - Nvidia, Microsoft, Apple, Palantir, Tesla and Alphabet - remain the main beneficiaries. Wedbush expects tech stocks to rise another 10% or so through the end of the year amid the reporting season and expanding investment in artificial intelligence.

Morgan Stanley strategist Michael Wilson took a more pessimistic stance. He warned that the S&P 500 could fall another 8-11% if the trade standoff between the U.S. and China is not resolved by November. He said the market is now vulnerable to a correction due to high investor activity and inflated valuations. However, if the trade confrontation eases, Wilson's baseline scenario assumes a gradual recovery of the U.S. economy through 2026.

In addition, the U.S. stock market is approaching a new test - the beginning of the corporate reporting season, which starts next week, Bloomberg writes. Investors enter this period amidst increased uncertainty, including due to the ongoing U.S. government shutdown. The impact of corporate reports may be especially noticeable as the release of official macroeconomic data has been suspended due to the shutdown of government agencies, MarketWatch notes.

"Postponing the release of key macro reports only adds to the fog of uncertainty," said David Kelly, chief global strategist at JPMorgan. - The key question is the extent to which duties have already started to push prices up."

"The margin for error is minimal and the risk of disappointment is high," State Street Investment Management chief investment strategist Michael Aron added in an interview with MarketWatch. He cited the fact that analysts have recently raised earnings forecasts for companies in the S&P 500 index, which has greatly inflated the bar of expectations "at a time when prices are at all-time highs and company valuations are at rock bottom." Nevertheless, Aron remains "cautiously optimistic."

Freedom Finance analysts also believe that the outlook for the U.S. stock market remains moderately positive despite the ongoing uncertainty. According to the note, which is at the disposal of OnInvest, the current correction can be viewed as an opportunity to gradually build up positions. At the same time they note: it is important to keep portfolio diversification, strictly control risks and be ready to promptly react to new signals from the Fed and corporate reports. According to experts, special attention should continue to be paid to the technology sector, avoiding excessive concentration in companies that depend on foreign markets and exports.

This article was AI-translated and verified by a human editor

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