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By Gabe Whisnant and Sonam Sheth
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Stocks surged Monday following the announcement of a 90-day truce in the trade war between China and the United States.
The Context
The U.S. and China issued a joint statement on Monday announcing the reprieve following trade talks in Geneva, Switzerland.
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Although Wall Street cheered the 90-day tariff pause, economists and analysts warn that stocks' resurgence could just as quickly be reversed if the U.S. president throws another curveball into trade talks, as he has frequently done.
What To Know
The S&P 500 climbed 3.3 percent in late-day trading, narrowing its gap to just 4.8 percent below its all-time high from February.
The index, a cornerstone of many Americans' 401(k) retirement plans, has gained more than 20 percent since its April low amid global market turmoil sparked by fears that President Donald Trump's sweeping "Liberation Day" tariffs would plunge the U.S. into a self-inflicted recession.
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The Dow Jones Industrial Average jumped by more than 1,100 points by market close on Monday, while the tech-heavy Nasdaq Composite Index went up by 4.3 percent, led by stocks like Apple, Nvidia and Tesla, which spiked by 6, 5 and 6 percent, respectively.
Wall Street's rebound came after the U.S. and China said in a joint statement earlier Monday that the U.S. will shave tariffs on Chinese goods down to 30 percent from as high as 145 percent. Beijing will cut its tariffs on U.S. goods from 125 percent to 10 percent.
The U.S.-China trade war erupted in earnest last month after the Trump administration announced that it was levying triple-digit tariffs on one of its biggest trading partners, alleging that China was engaging in unfair trading practices.
China retaliated by imposing trade barriers on the U.S., sparking widespread concerns of a shortage of a broad swath of consumer goods, skyrocketing prices and empty store shelves.
The U.S. said the Geneva talks resulted in "substantial progress," and Monday's joint statement said the parties will continue their "discussions about economic and trade relations."
What People Are Saying
Jeff Kilburg of KKM Financial told CNBC: "Markets are rallying because investors are surprised with the velocity of the Chinese trade tariff deal progress."
U.S. Treasury Secretary Scott Bessent said at a news briefing following the trade talks: "We concluded that we have shared interests and we both have an interest in balanced trade. The U.S. will continue moving towards that."
He added, "We had very robust discussions, both sides showed great respect."
Chinese state media agency Xinhua quoted a spokesperson for the Chinese commerce ministry as saying: "It is hoped that the U.S. side will continue to work with China on the basis of this meeting, thoroughly correct the erroneous practice of unilateral tax increases, continuously strengthen mutually beneficial cooperation, maintain the healthy, stable and sustainable development of China-U.S. economic and trade relations, and jointly inject more certainty and stability into the world economy."
What Happens Next
The 90-day tariff pause will be in effect as of May 14, the U.S.-China joint statement said.
This article includes reporting by the Associated Press.
Update 5/12/25, 4:57 p.m. ET: This story was updated with additional information.
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