News of a U.S. agreement with China to temporarily ease tariffs sent stocks soaring on Monday.
The S&P 500 rose 184 points, or 3.3%, to close at 5,844, while the Dow Jones Industrial Average leapt 1,161 points, or 2.8%, to close at 42,410. Early morning gains helped the S&P 500 index float back above where it was on April 2, the day President Trump announced sweeping tariffs that threatened to upend the global economy and spark a recession.
The Nasdaq Composite rose 4.4%, providing a measure of relief to tech companies at risk of retaliatory Chinese tariffs and export restrictions. Nvidia and Apple shares gained 5.4% and 6.3%, respectively.
In a joint statement released by The White House on Monday, the U.S. and China on Monday announced that they would substantially lower tariffs for 90 days. The agreement was struck over the weekend in Switzerland, where Treasury Secretary Scott Bessent and U.S. Trade Administrator Jamieson Greer met with a Chinese trade delegation.
Starting May 14, both countries will lower tariffs by 115%, according to the White House. That will bring the U.S. tariff on Chinese imports down to 30% from as high as 145%, and China's rate on American goods down to 10% from 125%. The 10% baseline tariff and other U.S. measures will remain in place.
UBS Global Wealth Management projects the U.S. tariff on Chinese imports will ultimately settle around 30% to 40%.
"Investors will now be focused on signs that the temporary fix can be turned into a lasting agreement," said Ulrike Hoffmann-Burchardi, chief investment officer at UBS Global Wealth Management, in a research note.
The value of the dollar climbed against other major currencies, while crude oil prices jumped more than 3% during midday trading. Yields on the 10-Year Treasury also rose to 4.5%, the highest its been since April 11.
Cautiously optimistic
Investors cheered the boom in stocks, but also warned the market rally could falter over the next three months as the U.S. and China approach the end of the tariff pause in August.
"This is a textbook recovery after the market's waterfall declines," said Gina Bolvin, president of Bolvin Wealth Management Group in an email to CBS MoneyWatch. "Expect volatility as we approach the 90-day reciprocal tariffs deadline."
Still, the Trump administration's success in striking an agreement with China — which was viewed as one of the more difficult agreements to negotiate — paves a smoother road ahead for Wall Street investors.
The U.S. reached a deal with the U.K. last week, the first trade pact to be announced since so-called "Liberation Day." Mr. Trump introduced the 10% tariff baseline on most imports on April 2, which remains in place.