US stocks rebound despite Trump’s trade war fears, amid hopes for constructive talks and potential Federal Reserve rate cuts.

In Short

US stocks are rebounding, with the S&P 500 erasing a 2% decline as investor sentiment improves amid trade talks between the US and China.

Despite recent volatility and economic concerns, major companies reported strong sales, indicating robust customer demand.

Wall Street rebound is gaining momentum as stocks recovered from earlier losses, despite concerns over potential economic impacts from Donald Trump’s trade war.

The S&P 500 managed to erase a 2% decline, marking the first such reversal since 2022. Investor sentiment improved following reports of proactive communication between the US and China regarding trade talks.

Some investors believe the Federal Reserve may implement rate cuts to prevent a recession. According to Fawad Razaqzada from City Index, weak economic data could prompt the Fed to act sooner, potentially leading Trump to soften his stance on tariffs.

Bear market territory

US stocks experienced significant volatility throughout the month due to the evolving trade situation, putting the S&P 500 near bear market territory with nearly a 20% drop since February. Although the index has regained some ground, it continues to face a challenging landscape with three consecutive months of declines, the longest since 2023.

Amid this turmoil, US Treasuries rebounded, achieving a fourth consecutive month of gains. However, the US dollar suffered its worst month since November 2022.