The session results indicate that the selective index, the Dow Jones Industrial Average, advanced 2.81%, the tech-heavy Nasdaq rose by 4.35%, and the broad S&P 500 gained 3.26%.
“The stock market is very happy and relieved with the agreement concluded this weekend with China,” highlighted Christopher Low from FHN Financial.
The U.S. and China have agreed to reduce the tariffs they applied to each other’s imports by 115 percentage points, following the escalation initiated by Donald Trump in April.
Currently, the U.S. applies a 30% tariff on imports from China, while China imposes a 10% tariff on U.S. imports.
This suspension, valid for 90 days, is set to take effect “by May 14,” announced representatives of both states in a joint statement released after two days of negotiations in Geneva.
“The reaction could have been even more positive if it were not just a pause (…), but I think investors’ reaction will encourage Trump and Xi Jinping to ensure that there will be progress toward a lasting agreement,” he added.
“Investors seized upon a glimmer of light in Trump’s trade tunnel, which was incredibly dark last month when they doubted the possibility of positive developments on the cross-border trade front,” summarized Jose Torres from Interactive Brokers in an analytical note.
This pause marks the first concrete sign of easing in this trade war that has shaken financial markets and fueled fears of inflation and economic slowdown in the U.S., China, and the rest of the world.
“The transition between tariffs, retaliations, and eventually trade agreements is an important sequence for the recovery of stock markets in the U.S.,” anticipated Adam Turnquist from LPL Financial.
On Tuesday, stock market operators will pay close attention to the release of the consumer price index for April.
This information is “important” because “economists are absolutely convinced that companies will pass the cost of tariffs” onto their prices, which, “if true, will start showing in the April numbers,” estimated Christopher Low.
