Traders on the floor of the New York Stock Exchange (NYSE) witnessed a significant rebound on Monday as U.S. and China officials reached a temporary agreement to reduce tariffs, a development that raised optimism about averting a trade war-induced recession. The Dow Jones Industrial Average surged by 1,037 points, or 2.5%, while staying close to its highs for much of the session, fueled by strong buying activity. The S&P 500 jumped nearly 3%, marking an impressive recovery of over 20% since its low in April at the peak of tariff-related concerns, and has narrowed its year-to-date losses to just 0.9%.
The Nasdaq Composite experienced a remarkable 4% increase, driven by a surge in technology stocks closely tied to China, with giants like Tesla and Apple leading the way. Treasury Secretary Scott Bessent described the negotiations as “very productive,” confirming a reduction in U.S. tariffs on Chinese goods to 30%, while China reciprocated by cutting tariffs on U.S. imports to 10%. In an appearance on CNBC’s “Squawk Box,” Bessent announced plans to reconvene with Chinese representatives in the coming weeks to work towards a broader agreement.
Major tech stocks reflected this optimism, with Tesla shares rising 7%, and both Apple and Nvidia gaining 5%. Companies heavily reliant on Chinese goods also benefitted: Best Buy and Dell Technologies each climbed 7%, while Amazon jumped 5%. Jeff Kilburg of KKM Financial noted, “Markets are rallying because investors are surprised by the velocity of the Chinese trade tariff deal progress.”
Escalating tensions between the U.S. and China peaked in April, with President Donald Trump hiking tariffs on Chinese imports to 145%. In retaliation, Beijing imposed 125% duties on select U.S. goods, pushing the S&P 500 close to bear market territory just last month. However, stocks began to recover after Trump announced a temporary pause on additional tariffs for most countries outside of China, allowing a glimmer of hope for investors.
With the latest deal between the U.S. and China surpassing expectations, traders have begun betting on the possibility of further agreements aiding in market stabilization. Last week, the U.S. and the U.K. unveiled a preliminary trade deal framework; now, this week’s China agreement exceeded trader optimism. Trump hinted that if negotiations progress favorably, tariffs could potentially be reduced further, creating additional market excitement.
Jeff Buchbinder, chief equity strategist at LPL Financial, commented on the unexpected low rates, stating, “This is a big positive surprise. However, it’s important to note that while this is a de-escalation, much work remains to be done. A pause isn’t permanent, and China received the same deal as other countries.”
Following the announcement, Treasury yields rose as investors slipped away from recession fears, which also diminished the likelihood of an immediate rate cut by the Federal Reserve. Commodity markets responded positively, with oil prices climbing amid a lessened recession outlook. Conversely, defensive stocks that had been safe havens during the tariff turmoil faced declines on Monday, with Coca-Cola and Philip Morris each dropping 2%, and AT&T losing 3%.
As the market shifts in response to the evolving trade landscape, analysts and investors alike are keenly monitoring developments, hopeful for a sustained path towards economic recovery.
Original Source: https://www.cnbc.com/2025/05/11/stock-market-today-live-updates.html
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Publish Date: 2025-05-12 22:45:00
