The U.S. and China announced on Monday that they would slash steep tariffs on each other for 90 days. The U.S. said it will cut tariffs imposed on Chinese imports to 30% from 145% while China said it would cut duties on U.S. imports to 10% from 125%.
“It’s a relief rally because there was a lot of anxiety and angst about tariffs between the U.S. and China,“ said John Praveen, managing director at Paleo Leon in Princeton, New Jersey, adding that the world’s two biggest economies appeared to be working to avoid the worst-case tariff scenarios.
Chris Brigati, chief investment officer at SWBC, an investment company in San Antonio, Texas, said “the market perceives any progress as positive.”
U.S. stocks had weathered steep losses and unusually high volatility after Trump announced tariffs on multiple U.S. trade partners on April 2.
On Monday, the S&P 500, the Nasdaq and the Dow all boasted their biggest single-day percentage gains since April 9 and the S&P broke above its 200-day moving average for the first time since late March.
The S&P 500 gained 184.28 points, or 3.26%, to finish at 5,844.19, its highest close since March 3 while the Nasdaq Composite gained 779.43 points, or 4.35%, to 18,708.34 for its highest finish since February 28.
Wall Street's “fear gauge”, the CBOE Volatility Index , which had hit a peak of 60 in April due to tariff fears, traded below 20 on Monday for the first time since late March. In commodities, safe-haven gold fell about 2.6%.
In technology, Apple rallied 6.3% after a report that it was considering raising the prices of its fall iPhone lineup.
Shares in NRG Energy soared 26.2% and lead S&P 500 advancers after the utility said it would acquire power generation assets from energy infrastructure investment firm LS Power in a deal valued at $12 billion.
Traders expect the Fed to deliver two 25-basis-point rate reductions by the end of 2025, with the first cut now expected in September, according to data compiled by LSEG.
On the Nasdaq, 3,285 stocks rose and 1,158 fell as advancing issues outnumbered decliners by a 2.84-to-1 ratio. The S&P 500 posted 15 new 52-week highs and 3 new lows while the Nasdaq Composite recorded 83 new highs and 50 new lows.
On U.S. exchanges about 20.20 billion shares changed hands compared with the 16.52 billion moving average for the last 20 sessions.
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