US stocks rally on Trump trade de-escalation with China
Traders work on the floor of the New York Stock Exchange (NYSE) at the opening bell on May 12, 2025, in New York City. (Photo by ANGELA WEISS / AFP)
NEW YORK, United States — Wall Street stocks finished solidly higher Monday, cheering an announcement that the United States and China sharply de-escalated a trade war that has rattled global markets.
Major indices traded within a tight range in a buoyant session after US President Donald Trump touted a “total reset” of relations with China. This included a steep drop in levies between the countries.
The Dow Jones Industrial Average jumped 2.8 percent to close at 42,410.10.
The broad-based S&P 500 rallied 3.3 percent to 5,844.19. The tech-rich Nasdaq Composite Index rocketed 4.4 percent to 18,708.34.
“The market is clearly looking at the overall trend towards de-escalation,” said LBBW’s Karl Haeling.
Since returning to the White House, Trump had imposed tariffs of 145 percent on many Chinese imports. Meanwhile, Beijing hit back with duties of 125 percent on US goods.
Stocks rise amid temporary lowering of tariffs
Following weekend talks between top officials in Switzerland, the United States agreed to temporarily lower its tariffs on Chinese goods to 30 percent. Meanwhile, China will reduce its own to 10 percent.
READ: US, China agree to slash tariffs in trade war de-escalation
Besides lower levies, the US-China announcement and an agreement last week with Britain “will convince business leaders that a final deal is going to be reached at some point,” said a note from Briefing.com.
“This should allow them to make investment/spend decisions,” the note said.
However, Haeling said both the deal with Britain and Monday’s China announcement leave “a lot of details to be ironed out.” This meant there remains uncertainty.
Markets are looking ahead to Tuesday’s US consumer price index data for April. Markets will be scrutinize this for evidence on the extent that tariffs result in pricing pressure.
