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Wall Street rallied as easing trade tensions between the US and China have lifted investor sentiment in Monday's session.
Yahoo Finance Senior Reporter Josh Schafer joins Market Domination to break down how the stock market (^GSPC, ^IXIC, ^DJI) is reacting to the temporary pause and rollback in tariffs both from and against China.
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
Well, US stocks surging as fears over an escalating trade war between the US and China ease. For more on Wall Street's tariff mindset, let's get to Yahoo Finance's Josh Shafer. Josh, what is the mindset?
The mindset seems to be that things are getting a little bit better than a lot of people thought, right? I think that's why you're seeing such a large rally in the stock market is I don't think headed into the weekend, there were a lot of strategists that we were talking to last week that were confident that two days of negotiations with China were going to lead to Treasury Scott, Treasury Secretary Scott Beson coming out on Monday and saying, "Actually, we've moved the China tariff rate down significantly from where it was and we have a 90-day pause." Right? I just don't think that was the base case headed into the weekend. So you got sort of a better than expected style rally in the broad market that you would get on maybe an earnings report, right? And it seems like just the large fears that people have been talking about for the last month was, A, when was this going to happen? And B, sort of to what extent would a rollback of China tariffs, even temporarily look like, and it seems like for now, it's just simply better than people had hoped and maybe takes away some of the risk that was out there in the market.
I keep thinking about April 2nd. And that, you know, that, that graphic that had all of the reciprocal tariffs on the various nations that seemed entirely pulled out of thin air, and market participants looked at that and they, what in the world is that? And where did it come from? And what are we going to do? Just this sheer, not panic, but like, what is going on? And so anything short of that, and everything since then has pretty much been short of that, was going to be not as bad as that. If that was the worst it could be, then like everything else, it's, is gravy, I guess.
It well, it helps explain something like a one-month chart of any of the three indexes there, right? When you look at it, obviously, stocks absolutely tanked for two days. And then the rip higher has been pretty incredible, honestly, to some extent. I mean, I'm looking at my chart from this morning, this was when we opened, but the NASDAQ is up about 6% since the morning of April 2nd. So it, that includes the big drawdown and then up. So it's up 6% since the morning of April 2nd. I mean, it's just kind of crazy to think about. And to your point, truly, one thing I've been wondering about is, okay, so we have the big discussions with China now going well. And I wonder at what point, maybe we're pricing in some optimism about how their, the US stance on China then translates to the US's stance on tariffs in general, and tariffs with a lot of these other countries, right? Because I think from a lot of perspectives, the contentiousness with China makes sense, and sort of the back and forth there makes a lot of sense. A lot of the other countries on that big board you talked about, I think we were looking at and saying, "Really? Like is that where our issue is?" And so then maybe does that make you feel better about just the overall kind of deal with tariffs? Because when you think about the rally over the last two weeks, the market was already sort of kind of frontrunning this news, right? So what news are we frontrunning more today? And maybe it's just general tariff de-escalation that people have sort of been rooting for.