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U.S. stocks soared Monday morning after Washington and Beijing struck a surprise deal to dramatically cut tariffs, marking a rare moment of clarity and good news in an otherwise volatile environment.
The agreement, announced early Monday after weekend talks in Switzerland, includes a 90-day pause on new tariffs and sharp rollbacks on existing duties — moves that sent futures skyrocketing in trading before the bell.
The Dow Jones Industrial Average was up 991 points, or 2.4%, shortly after markets opened. The S&P 500 rose 2.6%, and the Nasdaq soared 3.6% as tech stocks led the market relief rally. One analyst called the tariffs deal a “dream scenario” for tech.
Steep tariff cuts after weeks of brinkmanship
Under the truce, U.S. tariffs on Chinese goods will fall from 145% to 30%, while China will cut duties on American goods from 125% to 10%, both for an initial 90-day window. The rollback is far more aggressive than many expected and signals what negotiators described as “substantial progress” toward a longer-term resolution.
For markets, it’s a welcome reprieve from geopolitical brinkmanship. As Monday’s market open made clear, the deal is functioning as a pressure release for investor fears, not to mention a global supply chain that’s been creaking and grinding under the strain.
The sharp rally in major indexes further reflected that pivot, with the Nasdaq leading the charge and tech stocks in particular benefitting from easing supply chain constraints. The Magnificent 7 tech stocks rallied, with Amazon (AMZN) up 7%, Apple (AAPL) adding 4.7%, Nvidia up 4.1%, and Tesla (TSLA) rising 5.6%.
‘A huge win for the market and bulls’
Wedbush analysts called the deal a “huge win for the market and bulls,” noting that the cuts likely take a near-term U.S. recession “off the table.” Analysts at the firm now expect the focus to shift from the economic doom-and-gloom of the past six weeks toward a more normalized growth outlook. Other analysts questioned the point of all the upheaval.
Either way, the path forward is not entirely clear. Major issues remain unresolved, particularly restrictions around advanced chips and AI hardware involving firms like Nvidia (NVDA) and H20. But for now, the tariff thaw marks a major inflection point.
Economic data incoming, Walmart reports earnings Thursday
Investors will have plenty more to chew on this week, with a host of economic indicators set to land and the last major earnings report of the first quarter set to hit as well. Walmart (WMT) results are due Thursday and should provide an inside look at consumer sentiment, especially among hard-pressed American households.