The Dow Jones Industrial Average leapt nearly 600 points Monday, as a sudden shift in tone from President Trump toward China helped stabilize markets reeling from last week’s tensions. A calming message from the White House tempered fears of an escalating tariff war, fueling a risk-on move across U.S. equities. The rebound came as the S&P 500 rallied 1.6% and the Nasdaq jumped 2.2%, offsetting sharp declines from the prior session.

Tech & Semiconductors Drive the Rebound

Semiconductor and high-growth technology stocks paced the rally, with Broadcom leading after announcing strategic partnerships and upbeat guidance. Nvidia and AMD were also strong performers, benefiting from renewed optimism over AI and data center demand. The Philadelphia Semiconductor Index gained over 2%, marking one of its strongest single-day performances in recent weeks.

Analysts attributed the strength in tech to both sentiment and fundamentals: the sector is viewed as a key lever of long-term growth, especially in an environment of muted GDP expansion and low rates. With the Fed appearing more cautious on further rate hikes, investors rotated back into sectors that had been hardest hit in recent volatility.

Mixed Sector Performance Reflects Defensive Rotation

While tech surged, the gains were uneven across sectors. Consumer staples, utilities, and healthcare lagged as investors favored growth over safety in Monday’s rally. Financials and industrials posted modest gains, aided by expectations that easing trade tensions could revive global supply chains and export demand.

Friday’s sharp sell-off—triggered by Trump’s threat of 100% tariffs on Chinese imports—had disproportionately hit cyclical and discretionary names, tilting sentiment toward defensives. Monday’s rebound suggests that some of those rotations reversed, though not uniformly across all sectors.

Macro Drivers & Market Psychology

U.S. Treasury yields stabilized around 4.55% for the 10-year note, easing pressure on equity valuations and lowering implied discount rates for future earnings. The dollar also gave back some strength, supporting global-facing companies and emerging markets exposure.

Investor psychology played a notable role: after last week’s aggressive rhetoric elevated fear, Trump’s conciliatory comments allowed traders to re-enter positions they had liquidated. The rapid swing underscores how fragile confidence is when policy risk remains elevated and headline dynamics dominate flows.

Looking ahead, markets will closely monitor this week’s U.S. CPI release and retail sales reports, which could either validate the rally or trigger another sharp move if inflation remains sticky. Corporate earnings, especially from major banks and tech names, will also be scrutinized for signs of stress or resilience. Should the tone from Washington hold, and macro prints come in line or softer, the current rebound could gain traction. But any re-escalation of tariff rhetoric or hawkish surprises from the Fed would likely test this fragile recovery again.