News of a U.S. agreement with China to temporarily ease tariffs sent stocks soaring on Monday, with the major indexes rising more than 2% in early trading.
The S&P 500 rose 153 points, or 2.7%, to 5,812 as of 11:05 EST, while the Dow Jones Industrial Average added 1,011 points, or 2.5%, to 42,261. Early morning gains put the S&P 500 index above where it was on April 2, the day Mr. Trump announced wide-sweeping tariffs that threatened to upend the global economy and spark a recession.
The Nasdaq Composite, meanwhile, rose 3.4% indicating a sigh of relief from tech companies as the steep Chinese tariffs threatened to upend their supply chains resulting in substantial price hikes for consumers. Nvidia stock and Apple stock gained 3.3% and 5.9%, respectively.
In a joint statement released by The White House on Monday, the U.S. and China on Monday announced an that they would substantially lower tariffs for 90 days. The agreement was struck over the weekend in Switzerland, where Treasury Secretary Scott Bessent and U.S. Trade Administrator Jamieson Greer met with a Chinese trade delegation.
Starting May 14, both countries will lower tariffs by 115%, according to the White House. That will bring the U.S. tariff on Chinese imports down to 30% from as high as 145%, and China’s rate on American goods down to 10% from 125%. The 10% baseline tariff and other U.S. measures will remain in place.
UBS Global Wealth Management projects the U.S. tariff on Chinese imports will ultimately settle around 30% to 40%.
“Investors will now be focused on signs that the temporary fix can be turned into a lasting agreement,” said Ulrike Hoffmann-Burchardi, chief investment officer at UBS Global Wealth Management, in a research note.
The stock market wasn’t the only place that experienced a rally on Monday morning. The value of the dollar climbed against other major currencies, while crude oil prices jumped more than 3%. The 10-Year Treasury Yield also rose to 4.4%, the highest its been since April 11.
Cautiously optimistic
Investors cheered the boom in stocks, but also warned the market rally could falter over the next three months as the U.S. and China approach the end of the tariff pause in August.
“This is a textbook recovery after the market’s waterfall declines.” said Gina Bolvin, president of Bolvin Wealth Management Group in an email to CBS MoneyWatch. “Expect volatility as we approach the 90-day reciprocal tariffs deadline.”
Still, the Trump administration’s success in striking an agreement with China — which was viewed as one of the more difficult agreements to negotiate — paves a smoother road ahead for Wall Street investors.
The U.S. reached a deal with the U.K. last week, the first trade pact to be announced since so-called “Liberation Day.” Mr. Trump introduced the 10% tariff baseline on most imports on April 2, which remains in place.
“The market is going to take great comfort in the idea that there is a way forward and that all-time highs in the stock market are achievable before yearend,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management, in a research note.
Tech, retail and travel gains
Companies across retail, tech and travel saw widespread gains, with news of reduced tariffs bringing a wave of relief to businesses like Apple that rely on Chinese imports for their inventory of name brand products.
Amazon, which has already hiked prices on hundreds of goods as a result of the tariffs, rose more than 7%. Over 70% of the products sold on Amazon are produced in China, according to survey conducted by Jungle Scout.
The travel industry also saw a jump with Delta Air Lines and American Airlines each soaring more than 6%. Carnival cruise line rose 8.9% and Norwegian cruise line surged 8%.
Among the biggest gains were apparel and footwear companies, whose production is often based in China and elsewhere in Asia. Lululemon leapt 10% and Nike rose 7.3%.
contributed to this report.
