Nasdaq Composite rebounds 2% after Trump softer tone on trade tensions

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Sholanke Dele

13.10.2025

Nasdaq Composite rebounds 2% after Trump softer tone on trade tensions — Nasdaq recovers as trade tension eases

The Nasdaq Composite Index will open the new week on a positive tone after last Friday’s steep selloff that shook global equity markets.

Nasdaq futures rose nearly 2% in Monday’s premarket session as investors showed renewed interest in risk assets following U.S. President Donald Trump’s softer comments on trade tensions between the United States and China. The rebound comes after one of the sharpest single-day declines of the year, where the Nasdaq fell over 4% from its record peak at 23,125 to a ten-day low near 22,200 before finding support.

- Nasdaq rebounds 2% as investors reassess risk appetite after Trump’s softer trade comments.

- Rare earth export ban sparks AI stock selloff, deepening market concerns over earnings.

- Nasdaq RSI falls below 50, highlighting sentiment shift from optimism to defensive positioning.

Friday’s selloff marked the biggest single-day liquidation event in 2025. The drop erased all of October’s earlier gains and flipped the month-to-date performance to a 1.4% loss. The fall was not a technical correction alone but a reaction to escalating geopolitical and trade shocks that hit high-growth technology names hardest. The market was rattled after China announced a ban on rare earth exports to the United States, a vital material used in artificial intelligence infrastructure, semiconductors, and defense production. The move immediately pressured AI-related and chip stocks, which have been the backbone of the Nasdaq’s historic rally this year.

Nasdaq price dynamic (Aug - Oct 2025). Source: Tradingview

In retaliation, Washington imposed a 100% tariff on Chinese tech imports and introduced new export controls on U.S.-made software. The escalation deepened concerns about the outlook for corporate earnings and supply chain disruptions in the AI and semiconductor sectors. Those fears, coupled with ongoing warnings from analysts about market overvaluation and the potential for a stock bubble, triggered widespread profit-taking.

Traders eye tariff policies as key driver for next Nasdaq price direction

Technically, the Nasdaq’s fall pushed the daily RSI below the 50 mark, confirming a shift into bearish momentum for the first time since May. The sharp contraction in RSI reflected the sudden change in sentiment from euphoria to caution as traders quickly exited positions to manage risk exposure. However, Friday’s session also showed resilience as the 22,200 level provided support, preventing a deeper breakdown of the uptrend channel that has guided the index for weeks.

In the short term, the 20-day EMA has become the key pivot for determining whether the recovery can extend. A sustained close above this level could open the path back toward the 23,000 psychological mark and potentially another record high if sentiment holds steady. Still, tariff policies now carry more weight in shaping the Nasdaq’s next major direction, especially since the market appears to have already priced in the prospect of Federal Reserve rate cuts.

Recently, we discussed the Nasdaq Composite extending its six-day record streak despite overvaluation warnings. The index closed at 23,060, reflecting strong investor confidence in tech-driven earnings.

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