Principals question $100m maths spend, ex-cop faces porn probe, US and China agree to major tariff reductions.
The US and China agreed to lower tariffs for 90 days, easing trade tensions.
The S&P 500 rose 2.7%, Nasdaq gained 3.5%, and Dow Jones increased over 1000 points.
US tech and retail stocks surged, with Apple, Tesla, and Amazon seeing significant gains.
Stocks popped Monday after the United States and China agreed to dramatically lower tariffs for 90 days, with American brands in trade-sensitive retail and technology sectors soaring at the prospect of easing tensions between the world’s two largest economies.
By late morning, the S&P 500 was trading 2.7% higher, whilethe Nasdaq was closing in on 3.5%. The Dow Jones Industrial Average swelled more than 1000 points, or 2.5%.
“We are hearing markets uttering a huge sigh of relief as the thumbscrews are unwound a bit,” said Michael Farr, an investment analyst at Farr, Miller and Washington.
Global markets have been volatile since late February, when the White House began imposing tariffs on dozens of countries. Since then, the three major US indexes fell deep into correction territory before recovering; as of Friday’s close, the S&P 500 was roughly 3.5% lower for the year.
The deal announced on Monday offers a temporary reprieve to the trade war, slashing US tariffs on Chinese goods from 145% to 30%. Beijing said it would cut its blanket tariffs on American products from 125% to 10%. Both reductions take effect from Wednesday.
China also agreed to remove or cancel other measures, including export restrictions and the blacklisting of US companies.
US Treasury Secretary Scott Bessent said Monday that he expects to meet again with China’s trade representatives in the coming weeks, raising hopes for a broader trade agreement.
Scott Bessen says the decision to issue a 90-day pause on Trump's so-called reciprocal tariffs was driven by President Trump's 'strategy'. Photo / Getty Images
Bessent said the deal shows that the two countries can avoid the eye-for-an-eye dynamics that ratcheted up tariff rates in the early weeks of the trade war. The Trump administration does not want to fully decouple from China, Bessent said, but it wants to make US markets more resilient in key areas.
“Now what we have with the Chinese is a mechanism to avoid the upward tariff pressure like we did last time,” Bessent said on CNBC’s Squawk Box.
Several indicators of trade war market malaise partially reversed themselves Monday.
The dollar jumped 1.4% on Monday morning, regaining some of the ground lost in the onset of the global trade war. Investors sold US government bonds while pouring into riskier assets. Gold, which soared to record prices above US$3200 an ounce in mid-April, was down 3% by midmorning.
The Cboe Volatility Index, known as Wall Street’s “fear gauge,” fell 13% on Monday; at one point in early April, it had climbed to its worst level since 2020.
The price of crude jumped 4%, suggesting investors are seeing fewer risks to global economic growth. Oil prices are sensitive to concerns about broader economic growth, with crude prices falling in recent weeks as prominent investment banks warned that a recession looked increasingly likely.
International markets also reacted positively. Hong Kong’s Hang Seng Index, which lists many companies from China’s mainland, surged 3% overnight. Germany’s DAX gained about 0.6%, while London’s FTSE 100 added 0.5%.
US retailers saw some of the biggest early gains, with Best Buy, Gap and Nike stocks gaining between 6% and 10% in the first 30 minutes of trading. Amazon surged 7.5%. (Amazon founder Jeff Bezos owns the Washington Post.)
Traders work on the floor of the New York Stock Exchange during morning trading on May 12, 2025. Photo / Getty Images
The temporary tariff reprieve gave a particular boost to US tech companies with ties to Asia. Shares of Apple, which has significant manufacturing operations in Asia, were up 6% in early trading; Tesla jumped nearly 8%; and AI chipmaker Nvidia gained 4.5%.
Wedbush analyst Dan Ives said Monday’s trade deal represents a “best-case scenario” from the recent negotiations.
“With US and China clearly on an accelerated path for a broader deal we believe new highs for the market and tech stocks are now on the table in 2025 as investors will likely focus on the next steps in these trade discussions,” Ives said in a note to investors.
Other analysts said the market could be in for more bumps as the 90-day deadline approaches unless a more comprehensive and permanent agreement emerges before then. And investors will be closely watching upcoming economic data for signs of further weakening in the economy.
“With good news on the trade front poised to give stocks a boost at the start of the week, it will be up to inflation data, retail sales, and earnings to sustain the momentum,” wrote Chris Larkin, managing director for trading and investing at Morgan Stanley.
