Stocks surged higher Monday after the United States and China agreed to temporarily reduce tariffs following the start of trade negotiations over the weekend. The Dow Jones Industrial Average rallied over 1,100 points intraday, while the S&P 500 Index and Nasdaq Composite advanced about 3.3% and 4.4%, respectively.
Here's how the market settled on Monday:
S&P 500 Index
Dow Jones Industrial Average
Nasdaq Composite Index
Wall Street was elated Monday following positive trade developments between Washington and Beijing over the weekend, with U.S. Treasury Secretary Scott Bessent announcing that both nations have agreed to reduce their respective tariffs rates for 90 days to support further talks. The scope of those tariff reductions also surprised investors, with the U.S. cutting its 145% effective rate on most Chinese imports to 30% while China lowered its 125% levy on U.S. goods to 10%.
"The consensus from both delegation this weekend is neither side wants a decoupling," Bessent told reporters Monday, adding that the previous tariff rates were "the equivalent of an embargo." Moreover, Bessent said the 90-day pause could be extended "as long as there is good faith effort, engagement, and constructive dialogue," and expects to meet with Chinese trade representatives within the next few weeks.
President Donald Trump also boosted market enthusiasm on Monday, telling White House reporters that China is "opening up" to U.S. businesses and plans to speak to Chinese President Xi Jinping "maybe at the end of the week."
The temporary tariffs cuts lead to a surge in big tech shares Monday, with Amazon
Raymond James estimated last month that about 30% of the total value of goods sold on Amazon come from China, and Chinese advertisers accounted for 14% of total ad spending on the ecommerce platform in 2024. Moreover, ad spending from Chinese sellers represents about 11% and 6% of total spending on Meta and Google, respectively, according to the firm's analysis.
For Apple, the majority of its flagship products like the iPhone are manufactured in China and Chinese consumers accould for nearly 20% of its annual revenue.
Trump separately signed an executive order on Monday to lower the prices of prescription drugs sold in the U.S. The White House did not disclose which medications will be impacted, but said the effort will affect both commercial markets and federal Medicare and Medicaid prices.
"Basically, what we're doing is equalizing," Trump said during a press event on Monday. "We are going to pay the lowest price there is in the world. We will get whoever is paying the lowest price, that's the price that we're going to get."
Shares of U.S. drugmakers including Pfizer
The temporary tariff pause comes as the U.S. economy begins to see the effects of the previous duties between the two nations. April's consumer price index report due out on Tuesday will give market participants the first reading on inflationary pressures from Trump tariffs. The month's U.S. retail sales and producer price index readings on Thursday will offer more signs on the health of the economy after the initial tariff shocks.
