Stocks rebounded on Monday from Friday's selloff after President Trump appeared to soften his stance on trade with China. The Dow Jones industrial average gained 1.3 percent, the S&P 500 rose 1.6 percent, and the Nasdaq rallied 2.2 percent to recover much of Friday's losses incurred after the president's threat to impose 100 percent tariffs on China. The dollar was mostly higher while oil and US Treasuries did not trade.

Trump posted on social media that all will be fine with China and the US wants to help China, a dramatic shift in tone after the harshness of his comments on Friday. Other members of his team echoed his latest statement, which investors judged to suggest Trump's planned meeting with his Chinese counterpart would proceed as planned and that a deal of some kind was likely.

Among sectors, megacaps and AI/chipmaker names led the winners, including Broadcom, after an announcement of another partnership with OpenAI. Meta and Tesla led megacaps higher to boost the major averages. Best performers, in addition to technology, were communications services, consumer discretionary, and materials. Lagging were health care and consumer staples.

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.