U.S. stocks roared back on Monday after the U.S. and China agreed to temporarily slash tariffs following negotiations over the weekend in Switzerland, raising hopes a trade war won’t push the economy into a recession.
The Dow Jones Industrial Average surged 1,160.72 points, or 2.81%, and closed at 42,410.10. The 30-stock index ended the session near its highs of the day, with buying enthusiasm remaining strong. The S&P 500 popped 3.26% to end at 5,844.19, bringing its gain since its April intraday low at the height of tariff pessimism to more than 20%. The benchmark has cut its year-to-date losses to just 0.6%.
The Nasdaq Composite added 4.35% and settled at 18,708.34, as the initial China agreement sent technology stocks tied to the country — like Tesla and Apple — flying higher. It was the best day since April 9 for all three indexes.
Treasury Secretary Scott Bessent said on Monday that talks with China had been “very productive” and both countries had agreed to cut tariffs temporarily. U.S. tariffs on Chinese goods were brought down to 30%, and Chinese tariffs on U.S. imports were slashed to 10%. Bessent told CNBC’s “Squawk Box” on Monday that he expects to meet once again with representatives from Beijing in the “next few weeks” to start ironing out a bigger agreement.
Tesla jumped nearly 7%, while Apple and Nvidia gained 6% and 5%. Shares of companies that rely the most on Chinese goods rallied the most. Best Buy popped 6%, Dell Technologies climbed almost 8%, and Amazon advanced more than 8%.
“Markets are rallying because investors are surprised with the velocity of the Chinese trade tariff deal progress,” said Jeff Kilburg, CEO of KKM Financial.
Tensions between China and the U.S. reached a fever pitch in April after President Donald Trump raised tariffs on China to 145%. Beijing then retaliated with 125% duties of its own targeting U.S. goods. The S&P 500 nearly closed in bear market territory last month — down almost 20% from a record set in February — following the “liberation day” announcement. Stocks then recovered as Trump dialed back the extra “reciprocal” rates on most countries outside of China in a 90-day pause.