U.S. stocks rebound as U.S.-China agree to cut tariffs, boosting market confidence and optimism over trade tensions.
In Short:
U.S. stocks rebounded significantly after an agreement between the U.S. and China to reduce tariffs. Major indices like the Dow and S&P 500 saw notable gains, driven by positive negotiations and increases in tech stocks.
U.S. stocks experienced a significant rebound on Monday after the U.S. and China reached an agreement to temporarily reduce tariffs following negotiations in Switzerland.
The Dow Jones Industrial Average increased by 1,113 points, or 2.6%, remaining strong throughout the session. The S&P 500 rose by 3%, marking over a 20% gain since its low in April amid tariff concerns. It has now reduced its year-to-date losses to 0.9%.
The Nasdaq Composite gained 4%, boosted by an increase in technology stocks linked to China, such as Tesla and Apple.
Treasury Secretary Scott Bessent described the talks with China as “very productive”. The U.S. has reduced tariffs on Chinese goods to 30%, while China has lowered tariffs on U.S. imports to 10%. Bessent indicated further meetings with Beijing representatives are anticipated in the coming weeks to work on a more comprehensive agreement.
Tesla shares rose by 6%, while Apple and Nvidia followed closely with increases of 6% and 5%, respectively. Companies heavily reliant on Chinese goods saw some of the largest gains, with Best Buy and Dell Technologies both increasing by 8%, and Amazon also rising by 8%.
Investment strategist Jeff Kilburg noted that market rallies were driven by investor surprise at the rapid progress of the tariff negotiations. Tensions between the U.S. and China had escalated sharply in April but recent developments have led to a recovery in stock prices.
