According to CNBC, U.S. stock markets rebounded Monday, October 13, 2025. The Dow Jones Industrial Average rose 587.98 points, gaining 1.29% to close at 46,067.58. The S&P 500 climbed 1.56% to finish at 6,654.72. The rally recovered 67% of Friday's losses for the Dow and 56% for the S&P 500.

The rebound came after President Donald Trump posted on Truth Social Sunday evening. His message stated "it will all be fine" with China. This followed Friday's threat to impose 100% additional tariffs on Chinese imports. Markets had plunged Friday, with the S&P 500 dropping 2.71%. Investors called this pattern the "TACO" trade, meaning Trump Always Chickens Out.

Why Monday's Recovery Matters

The market movement reflects growing investor sensitivity to trade policy shifts. CNN Business reports that Trump threatened the new tariffs after China expanded export controls on rare earth minerals. These materials are essential for electronics manufacturing. The president's Friday announcement sent the VIX fear index up 31.83% to $21.66.

The reversal prevented further damage to technology stocks. Amazon, Nvidia, and Tesla had each fallen approximately 5% on Friday. Together, tech megacaps lost $770 billion in market value that day. The Monday rally helped restore investor confidence ahead of third-quarter earnings season. Major banks were scheduled to report results Tuesday morning.

Trade War Effects on Global Markets

The escalation reveals deeper tensions in U.S.-China economic relations. Trump first imposed 10% tariffs on Chinese goods in February 2025. Rates later reached minimums of 145% before negotiations reduced them to 30%. China responded with its own retaliatory measures throughout the year.

Fortune notes that China has successfully diversified its export markets. Chinese shipments to the U.S. fell 27% in September 2025. However, total Chinese exports rose 8.3% compared to the previous year. China recorded $328.6 billion in exports for September, the highest monthly total for 2025.

The World Bank adjusted its forecasts based on trade war impacts. Chinese economic growth expectations rose to 4.8% for 2025. Meanwhile, U.S. growth projections dropped to 1.4% for the year. These revisions suggest tariffs may harm the U.S. economy more than China's.

Market volatility remains elevated despite Monday's gains. FinancialContent reports that options markets show mixed sentiment ahead of earnings reports. Individual stock options priced in average post-earnings moves of 4.7%. This reflects high expectations for price swings. Investors remain cautious about companies with exposure to U.S.-China trade tensions.

Further Reading

For deeper insights into global adoption trends, our Alternative Financial Systems Index tracks regulatory frameworks and adoption metrics across 50 countries. The index provides comprehensive data on how different markets respond to trade disruptions and policy changes.