Stocks Surge on US-China Trade Truce

The US stock market experienced a significant surge on Monday after the US-China agreement to lower tariffs which led to a 2.6% increase in the S&P 500 and a 951-point (2.3%) gain in the Dow and a 3.5% rise in the Nasdaq. The 90-day truce establishes new tariff rates by reducing US tariffs on Chinese goods from 145% to 30% and Chinese tariffs on US goods from 125% to 10% which prevents a potential economic recession. The Geneva talks produced a deal which eliminates specific tariffs while putting other tariffs on hold until May 14 while maintaining a 20% US tariff to force China into fentanyl action. Treasury Secretary Scott Bessent confirmed that both nations refused to separate their economies while China’s Commerce Ministry viewed this move as a collaborative measure. The price of crude oil increased by 2% while Treasury yields rose because market expectations about rate cuts diminished. The S&P 500 index regained its distance from its February peak by 5.5% after experiencing a 20% decline following Trump’s April tariff implementation. The agreement comes after a UK-US agreement but experts maintain that US-China relations face enduring difficulties. The holiday season benefits retailers through tariff relief yet future tariff increases to 54% for the US and 34% for China remain possible if negotiations fail.