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NEW YORK (AP) — Stocks are surging on Wall Street after China and the United States announced a 90-day truce in their trade war. They agreed to take down most of their tariffs that economists warned could start a recession and create shortages on U.S. store shelves. The S&P 500 was 2.7% higher in early trading Monday. The Dow Jones Industrial Average jumped 981 points, or 2.4%, and the Nasdaq composite was 3.7% higher. Crude oil prices jumped because a global economy less weakened by tariffs would be hungrier for fuel. The value of the dollar climbed against other currencies and Treasury yields rose.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
HONG KONG (AP) — U.S. futures surged Monday after the U.S. and China announced they were suspending for 90 days most of the sharp tariff hikes each has imposed since U.S. President Donald Trump began escalating his trade war.
A joint statement on Monday said that for a 90-day period, the U.S. will cut tariffs on Chinese goods to 30% from as high as 145%. China said its tariffs on U.S. goods will fall to 10% from 125%.
The agreement to allow time for more talks followed weekend negotiations in Geneva, Switzerland, that the U.S. side said had made “ substantial progress.”
Wall Street cheered the development with futures for the S&P 500 jumping 3.1%, while futures for the Dow Jones Industrial Average rose 2.5%. Futures for the Nasdaq, home to the biggest U.S. technology companies, soared 3.9%.
American microchip companies, which source much of the material needed for their semiconductors from China, were among the biggest gainers early Monday. ON Semiconductor, Micron and Broadcom all soared between 6% and 8%. Nvidia rose 4.8%.
Travel companies also enjoyed big gains, with American, Delta and United Airlines all up around 7%. Major cruise lines rose similarly.
Retailers, who get much of their inventory from China, also benefited from the announced tariff pause. Amazon was up 7.8% and Best Buy jumped 10.4% early.
Pharmaceutical companies were among the few losers Monday after Trump said he planned to signed an executive order Monday that if implemented, could bring down the costs of some medications.
The order Trump is promising will direct the Department of Health and Human Services to tie what Medicare pays for medications administered in a doctor’s office to the lowest price paid by other countries.
A big pharma trade group criticized the plan and Johnson & Johnson, Merck and Pfizer all tumbled around 3%.
Also Monday, Texas power company NRG Energy said it will essentially double its generation capacity through a $12 billion cash and stock acquisition of natural gas facilities in the Northeast and Texas from LS Power Equity Advisors, an energy focused investment manager. Shares of NRG rose more than 9% early Monday.