U.S. stocks rallied on Monday after the United States and China agreed to temporarily slash tariffs for 90 days following negotiations over the weekend, easing fears of a global trade war and raising hopes that the economy won’t slip into a recession. All the major indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) jumped 2.8%% or 1,160.72 points, to close at 42,410.10 points, its highest close since March 26.
The S&P 500 rallied 3.3% or 184.28 points to end at 5,844.19 points, its biggest close since March 3. Consumer discretionary, tech and industrial stocks were the biggest gainers.
The Consumer Discretionary Select Sector SPDR (XLY) jumped 5%, while the Technology Select Sector SPDR (XLK) climbed 4.6%. The Industrials Select Sector SPDR (XLI) added 3.1%. Ten of the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq climbed 4.4% or 779.43 points, to finish at 18,708.34 points.
The fear-gauge CBOE Volatility Index (VIX) was down 16.03% to 18.39. Advancers outnumbered decliners on the NYSE by a 2.83-to-1 ratio. On Nasdaq, a 2.84-to-1 ratio favored advancing issues. A total of 20.20 billion shares were traded on Monday, higher than the last 20-session average of 16.52 billion.
Wall Street Roars Back after Trade Talks
Stocks rallied on Monday after the United States and China agreed to a trade deal following talks in Switzerland over the weekend. Both countries agreed to slash the stiff tariffs imposed on each other for 90 days.
The United States said that it will slash tariffs to 30% on Chinese imports from 145%, while China will cut tariffs on U.S imports to 10% from 125%. Investors felt a bit relieved and turned their focus once again to riskier bets from more defensive assets.
Stocks with strong connections to China rallied, with shares of Tesla, Inc. (TSLA) and Apple, Inc. (AAPL) jumping 6.8% and 6.3%, respectively. Shares of NVIDIA Corporation (NVDA) gained 5.4%. NVDA carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Tech stocks were the biggest gainers on Monday, with all three major indexes recording their best day since April 9.
U.S. stocks have been suffering since Trump announced sweeping tariffs on April 2. While the President imposed a baseline 10% tariff on all trading partners of the United States, he announced 145% tariffs on Chinese imports. In retaliation, China slapped a 125% tariff on all U.S. imports.
However, Trump has since paused tariffs for 90 days for all countries except China. Since then, stocks have recovered and regained most of their lost ground.
Investors are now hopeful that more trade deals will be reached with other countries in the coming days. They are also expecting the Federal Reserve to resume rate cuts in September. The consumer price index (CPI), which will be out on Tuesday, will give a clearer picture of this.
No major economic data was released on Monday.
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