Stocks rip higher after Friday's tariff sell-off, why the US-China trade conflict 'isn't going away'

Market Overview - US stocks rebounded significantly after President Trump softened his stance on China tariffs, with the Dow up nearly 500 points and the S&P 500 gaining 1.4% [1][11] - The NASDAQ saw a notable increase of over 2%, marking its best day since May following a poor performance the previous Friday [1][11] - Small-cap stocks outperformed, rising 2.76%, indicating a bullish sentiment across the market [1] Sector Performance - Technology stocks led the gains, particularly semiconductor companies, with Broadcom's stock rising 9% following news of a partnership with OpenAI [1][3] - Consumer discretionary and materials sectors also performed well, while healthcare and staples were the only sectors in the red [1] - The US dollar index saw a slight increase of 0.3% [1] Trade Relations and Economic Outlook - Analysts suggest that the recent US-China trade tensions may not significantly disrupt market momentum, emphasizing the importance of focusing on economic cycles rather than headlines [1][2] - The average tariff rate for the US has risen to approximately 15%, with potential increases bringing it closer to 20% if new tariffs are implemented [4] - Despite trade tensions, US GDP growth is projected at 2.1% for this year and 2.3% for next year, driven by consumer resilience and AI investments [4] AI and Technology Developments - OpenAI has partnered with Broadcom to co-develop custom AI chips, with a deal involving up to 10 gigawatts of power, which could potentially support around 20 million homes [3] - The AI sector is viewed as a booming opportunity rather than a bubble, with significant earnings growth observed in major tech companies [2][3] - Tesla's stock is also benefiting from AI developments, with analysts highlighting its potential as a disruptive force in the automotive industry [6][7] Investment Strategies - Investors are advised to focus on sectors that may benefit from rising unemployment, such as financials and homebuilders, as these areas could see improved performance in a low-rate environment [2][4] - JP Morgan announced a $10 billion investment plan targeting key industries essential for national defense and resiliency, indicating a long-term commitment to strategic sectors [5]