U.S. stocks surged on Monday following the announcement of a 90-day truce in the trade war between the United States and China. The S&P 500 rose by 3.3% to 5,844.19, bringing it within 5% of its all-time high set in February, while the Dow Jones Industrial Average jumped 1,160 points, or 2.8%, to 42,410.10. The Nasdaq composite also saw a significant increase of 4.3% to 18,708.34.
The truce involves both countries temporarily reducing their tariffs. The U.S. will cut tariffs on Chinese goods from as high as 145% to 30%, and China will reduce tariffs on U.S. goods from 125% to 10%. This move is expected to add 0.4 percentage points to the U.S. economy's growth this year, according to UBS's U.S. chief economist Jonathan Pingle. Additionally, crude oil prices climbed, the U.S. dollar strengthened, and Treasury yields jumped, while gold prices fell.
The agreement comes at a critical time, allowing retailers and suppliers to prepare for the back-to-school and holiday shopping seasons. Stocks of smaller companies in the Russell 2000 index rose by 3.4%, and apparel companies like Lululemon, up 8.7%, and Nike, up 7.3%, saw strong gains. Travel companies such as Carnival, up 9.6%, and Delta Air Lines, up 5.8%, also surged. Retailers like Best Buy, up 6.6%, and Amazon, up 8.1%, benefited from the news. However, analysts caution that conditions could change quickly, as has been seen in previous fluctuations in Trump's tariff policies. The pause follows recent trade deals with other countries, including the United Kingdom, which will reduce tariffs on many U.K. imports to 10%.
U.S. stocks soared on Monday, just hours after the U.S. and China announced an agreement to slash tariffs for 90 days as the world’s two largest economies negotiate a wider trade deal. @selinawangtv reports more on the agreement. https://t.co/BsaZuxexM8
Wall Street surges after US, China agree to slash tariffs for 90 days in pivotal thaw of trade tensions https://t.co/JLLy6VE6UE https://t.co/Q0jaa75FuO
📈 Markets soared as the U.S. and China agreed to a 90-day tariff truce, boosting investor confidence and driving growth predictions. https://t.co/CW9FxTQd9i
Global stocks surged Monday after the U.S. and China agreed to de-escalate tariffs that had effectively frozen trade between the world’s largest economies. https://t.co/Gv2csqSsPz