Dow Jones futures rose sharply Sunday night, along with futures for the S&P 500 and Nasdaq, amid a flurry of U.S.- China news. Late Friday President Donald Trump moved to impose an extra 100% tariff on China, but on Sunday that "it will all be fine."
The stock market sold off Friday as Trump threatened tariffs over China's rare-earth curbs, with the Dow Jones undercutting its 50-day line. Many stocks with AI or China exposure tumbled. Some pulled back from buy points but held up reasonably well, such as Oracle.
Tesla reversed lower on Friday and for the week, but the chart action could be constructive.
Investors probably should have taken some action to cut exposure and prepared to do more.
Taiwan Semiconductor, JPMorgan Chase, Goldman Sachs headline earnings this week, while Oracle's AI World conference starts Monday.
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Dow Jones Futures Today
Dow Jones futures rose 0.9% vs. fair value. S&P 500 futures gained 1.3% and Nasdaq 100 futures jumped 1.7%.
Bitcoin, which plunged Friday, rebounded Sunday as well.
Crude oil futures rose more than 1%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Trump Says An 'Eternity' Before 100% China Tariff
President Trump announced Friday evening on Truth Social that he would impose a 100% extra tariff on Chinese goods, above and beyond current tariffs, effective Nov. 1. He also said he will impose export controls on "any and all critical software."
Trump later Friday said he hasn't cancelled a meeting with President Xi at the APEC meeting, which runs Oct. 31-Nov. 1. "I don't know that we're going to have it, but I'm going to be there regardless, so I would assume we might have it."
On Friday morning, President Trump said he was considering "massive" tariffs, saying Beijing was holding the world "captive" with its rare earth restrictions. On Thursday, China imposed much-tighter export curbs on rare earths as well as battery components. That affects EVs , chips and many other industries, as well as military uses.
Early Sunday, China's Commerce Ministry justified its moves as defensive reactions to recent U.S. actions to close loopholes to prevent Beijing from getting advanced chips. It warned the U.S. to stop threatening tariffs and said China was ready to take "corresponding measures," saying it's "not afraid" of a trade war.
On Sunday afternoon, Trump was more conciliatory, writing on Truth Social, "Don't worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn't want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!"
In a later post, Trump said the Nov. 1 deadline is an "eternity," but could advance the date if China takes further actions.
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Stock Market Rally Sells Off
The stock market rally was headed for a mixed week, with the S&P 500 and Nasdaq touching record highs thanks to AI optimism. Then Trump's China threats slammed all the indexes.
The Dow Jones Industrial Average slumped 2.7% in last week's stock market trading. The S&P 500 index fell 2.4%. The Nasdaq composite shed 2.5%, thanks to Friday's 3.6% dive. The small-cap Russell 2000 sank 3.3%. All of these indexes fell below their 21-day lines, while the Dow Jones undercut its 50-day.
The other indexes were not far behind.
The Invesco S&P 500 Equal Weight ETF tumbled 3.2% for the week to a two-month low, closing below its 50-day line for the first time in five months.
Rare-earths plays such as MP Materials were big winners, while some highly speculative growth plays also had a strong Friday.
But many leading stocks suffered some hefty losses or reversals on Friday.
The 10-year Treasury yield sank 6.5 basis points to 4.05%, down nine basis points on Friday.
U.S. crude oil futures fell 3.25% to $58.90 a barrel for the week, tumbling 4.2% on Friday to a five-month low.
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ETFs
Among growth ETFs, the Innovator IBD 50 ETF edged up 0.8% last week, but tumbled 3.85% on Friday. The iShares Expanded Tech-Software Sector ETF sank 2.4% for the week, with Oracle a top IGV holding. The VanEck Vectors Semiconductor ETF gave up 3.5% thanks to Friday's 5.9% dive, with Nvidia and Taiwan Semi massive components.
ARK Innovation ETF lost 1.4% for the week thanks Friday's 5.4% slide. last week. ARK Genomics ETF gave up 4% Friday but finished the week up 1.1%. Tesla stock is the No. 1 holding across ARK Invest's ETFs.
SPDR S&P Metals & Mining ETF popped 3.4% last week. SPDR S&P Homebuilders ETF sold off 7.5%. The Energy Select SPDR ETF shed 4.15% and the Health Care Select Sector SPDR Fund retreated 1.9%. The Industrial Select Sector SPDR Fund dropped 2.9%.
The Financial Select SPDR ETF fell 2.9%, with JPMorgan stock and Goldman Sachs huge holdings.
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Tesla Stock
Tesla stock tumbled 5.1% to 413.49 on Friday, undercutting the 21-day and recent lows. But TSLA now has a 13%-deep handle with a 470.75 buy point on a very deep base going back to late December.
So this could be constructive action. Ideally, Tesla stock would find its footing and tighten up. But if Tesla gets much closer to the 400 level, recent investors might want to take at least partial profits.
This past week, Tesla unveiled stripped-down, cheaper Model Y and Model 3 variants.
It also released Full Self-Driving V14, but only to influencers and a limited number of users. On Saturday, Tesla sent out FSD V14.1.1.
Tesla will report Q3 earnings on Oct. 22.
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What To Do Now
The stock market rally suffered a big sell-off Friday.
It's possible that Trump and Xi will quickly reach a new detente, triggering a snapback rally. But tensions could intensify, triggering more-significant market losses.
Investors who have been heavily exposed probably should have taken a step or two back Friday, cutting losers and taking partial profits on winners.
Be ready to do more. But also look for stocks and sectors that held up relatively well on Friday, including Oracle.
Oracle's AI World conference starts Monday. JPMorgan, Goldman Sachs and Wells Fargo earnings are due Tuesday with Taiwan Semiconductor and Interactive Brokers on Thursday.
The U.S. government shutdown continues, though it hasn't affected financial markets significantly so far.
JPMorgan stock is on IBD Leaderboard, with Tesla stock on the Leaderboard watchlist. Nvidia and Taiwan Semiconductor stock are on the IBD 50. Nvidia stock is on the IBD Big Cap 20. Oracle was Friday's IBD Stock Of The Day.
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