Market Rebounds Again from Early Selloff as Banks and Defensive Stocks Lead the Way

After a rough start to the session, the stock market mounted an impressive comeback, trimming steep morning losses and closing mixed by the bell. The S&P 500 slipped 0.2%, the Nasdaq Composite declined 0.8%, while the Dow Jones Industrial Average managed a 0.4% gain. The early decline followed reports from Reuters that China had sanctioned five U.S.-linked subsidiaries of South Korea’s Hanwha Ocean—a move that briefly reignited trade tension concerns.

Despite the shaky open, investors quickly shifted to a “buy-the-dip” stance as earnings and sector rotation dominated attention. Major banks set a positive tone for the new earnings season: Wells Fargo surged more than 7% after topping profit and revenue estimates, while Citigroup added nearly 4% on strong results of its own. Goldman Sachs and JPMorgan Chase also beat expectations but saw some profit-taking after recent gains.

The consumer staples sector led the rebound, rising 1.7%, buoyed by a nearly 5% jump in Walmart, which announced a new partnership with OpenAI. Other defensive areas, including industrials, real estate, utilities, and materials, each posted gains of roughly 1% or more, helping balance weakness in technology and discretionary names.

Technology remained the session’s drag, with the PHLX Semiconductor Index tumbling 2.3% as NVIDIA fell 4.4% and chip stocks broadly retreated. The Vanguard Mega Cap Growth ETF shed 0.8%, though smaller-cap indices such as the Russell 2000 and S&P MidCap 400 rallied 1.4% and 0.9%, respectively, as easing-rate expectations supported risk appetite outside of the mega-caps.

Energy shares slipped modestly even as oil prices declined another 1.1% to $58.77 per barrel.

On the policy front, Federal Reserve officials reinforced expectations of another rate cut before year-end. Chair Jerome Powell acknowledged rising downside risks to employment, while Boston Fed President Susan Collins supported a “modest” easing path as inflation cools. Futures markets now imply a 96.7% probability of a 25-basis-point cut at the October FOMC meeting, according to the CME FedWatch Tool.

In sum, the day’s sharp turnaround underscored the market’s resilience amid headline volatility. Earnings strength and steady rate-cut expectations outweighed geopolitical jitters, allowing investors to look past early weakness and finish the session on a steadier footing.

Our FTinvest 11 model portfolio posted a strong rebound on Tuesday, rising 1.1% to close at 842.42, as easing trade tensions and a wave of buying across key components helped the portfolio recover a portion of last week’s steep losses.

After an uncertain open, sentiment turned decisively positive following early strength in the financial and consumer sectors. Several growth holdings regained traction as broader market momentum improved throughout the session. The rebound reflected renewed risk appetite following signs of stabilization in global markets and steady expectations for continued monetary easing by the Federal Reserve. Despite lingering geopolitical uncertainties, investors showed a willingness to step back into equities after recent volatility.

With today’s move, FTinvest 11 climbed back above the 840 level; the index continues to outperform most benchmarks on a year-to-date basis, demonstrating relative resilience amid a challenging macro backdrop.