Trump Sends Conciliatory Message Amid Tensions Ahead of Summit
OpenAI and Broadcom Partnership Fuels Rally in Tech Stocks
On October 13 (local time), all three major indices on the New York Stock Exchange rose simultaneously. As President Donald Trump sought to calm heightened trade tensions with China by stating, "Everything will be fine," a sense of relief spread through the market, which had plunged on October 10 following his hardline remarks on China. In addition, news of strengthened cooperation between OpenAI and Broadcom further fueled the rally in technology stocks.
As of 10:28 a.m. on the New York Stock Exchange, the blue-chip Dow Jones Industrial Average was up 404.39 points (0.89%) from the previous trading day, standing at 45,883.99. The S&P 500 Index, which focuses on large-cap stocks, rose 77.65 points (1.19%) to 6,630.16, while the tech-heavy Nasdaq Index jumped 375.338 points (1.69%) to 22,579.768.
By sector, technology stocks led the gains. U.S. semiconductor company Broadcom surged 8.91% after it was reported that the company had signed a multi-year contract with OpenAI, the developer of ChatGPT, to build custom artificial intelligence (AI) chips and computing systems. Nvidia rose 2.89%. AMD and Oracle were also strong, rising 1.9% and 4.53%, respectively.
President Trump recently delivered a conciliatory message amid escalating trade tensions with China. He stated, "The United States wants to help China, not hurt it," and added, "Don't worry about China. Everything will be fine." He also said, "President Xi, who is highly respected, is simply going through a tough time," and added, "He does not want his country to fall into a recession, and neither do I."
As the U.S.-China summit scheduled for later this month in Gyeongju, South Korea approaches, the two countries have been escalating their trade war by exchanging export controls on rare earth elements and imposing ultra-high tariffs of up to 100%. President Trump's remarks are interpreted as a conciliatory gesture aimed at easing concerns over a possible breakdown of the summit and calming financial market instability. In fact, when President Trump made hardline statements against China on October 10, the New York Stock Exchange plunged, wiping out about 2 trillion dollars in market capitalization in a single day.
U.S. Vice President J.D. Vance also said in a Fox News interview the previous day that he hopes China "chooses a rational path," adding, "The U.S. president holds far more cards than China, but if they are willing to respond rationally, the United States will do the same."
Tobin Marcus, Chief U.S. Policy Strategist at Wolfe Research, commented, "While fundamental tensions and uncertainties remain, concerns over 100% tariffs or destructive export controls are likely to ease as long as U.S.-China talks continue," and analyzed, "President Trump appears to be signaling to investors that buying the dip is safe."
Jim Reid, Head of Global Macro-Thematic Research at Deutsche Bank AG, noted, "The mood has turned noticeably positive," and pointed out, "Both sides are likely trying to strengthen their positions in short-term negotiations."
Yields on government bonds are rising, especially for longer-term maturities. The yield on the benchmark 10-year Treasury note, a global bond market indicator, rose 3 basis points (1bp = 0.01 percentage point) from the previous day to 4.08%. The yield on the 2-year Treasury note, which is sensitive to monetary policy, is trading at around 3.52%, unchanged from the previous day.
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