Good morning, investors. After a day deep in the red, stocks turned green again Monday as investors for the umpteenth time this year shrugged off fears of a trade war. Today’s edition breaks down what could come next — for better or worse.

President Trump catalyzed the worst market sell-off in six months and then reversed it with a single post on Truth Social.

Friday’s $2 trillion rout led some commentators to call out the popping of a bubble, yet it turned out to be a one-day bear market that vanished by the next trading session.

US stocks finished higher Monday, recovering more than half their losses from the sell-off, while bitcoin and other cryptocurrencies also climbed.

As a recap:

The series of events echoed April’s “Liberation Day” pullback, when tariff news spooked investors but ultimately punished sellers more than those who stayed in the market.

Yardeni Research founder Ed Yardeni expects the US and China to reach a deal before any lasting economic damage occurs, something markets seem to now recognize.

“The odds favor Teams Trump and Xi stepping back from the brink and avoiding the deep global recession all this would likely cause,” Yardeni wrote in a Monday note.

Strategist Michael Wilson of Morgan Stanley, meanwhile, said the stock market was set up for a correction anyway given valuation concerns and unfavorable seasonality.

The bank sees the S&P 500 resuming its climb, arguing that the broader cycle still looks early-stage despite rising volatility and stretched valuations.

Not only that but recession risks, Wilson noted, are indeed behind us.

That said, he maintains that a second, larger sell-off is likely if the US and China fail to reach an agreement.

“With Friday’s impulsive reversal at a key level of resistance, we believe the first leg up of this new bull market is now complete and we can see a healthy correction,” Wilson said.

“If we don’t see trade de-escalation over the next several weeks, the drawdown is likely to be larger than consensus expects (i.e, 10-15% in S&P 500 terms).”

To be clear, if we shelve the geopolitics, the optimistic case for stocks becomes hard to refute.

As we covered Monday, the bull market just reached its third anniversary, and history suggests plenty of upside ahead.

“Most bull markets go longer than three years,” said LPL Financial’s chief equity strategist Jeff Buchbinder.

“They last about five years on average, but the 1990 and 2009 bulls lasted twice that long. So this bull is not old.”

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🏦S&P 500 financials begin reporting earnings. The sector is seen reporting the fourth highest year-over-year earnings growth of all 11 sectors for the third quarter at 13.2%, with consumer finance industry expected to see the highest growth in the sector at 29%. (FactSet)

🇨🇳 China tariffs don’t have to happen, according to Treasury Secretary Scott Bessent. The two sides could step back from an escalation in the trade war with talks in the coming weeks, he said, and the presidents could still meet soon in South Korea. (WSJ)

🇺🇸JPMorgan will invest $10 billion in a national security initiative. That capital will flow to companies tied to energy independence, defense, frontier technologies, supply chain and advanced manufacturing. Jamie Dimon said the US has become too reliant on “unreliable sources of critical minerals.” (Barron’s)

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🗓 October 14, 2008: The US Treasury launched its Capital Purchase Program as part of TARP (Trouble Asset Relief Program), pivoting from buying “toxic” assets to injecting capital into US banks to help stabilize the financial system.

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📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

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