$2 trillion flows into U.S. stock market at open

Published: Monday, May 12, 2025 at 2:56 pm

**U.S. Stock Market Soars on China Trade Deal Hopes, But Caution Advised**

The U.S. stock market experienced a significant surge on Monday, May 12th, with approximately $2 trillion flowing in at the opening bell. The S&P 500, a key indicator of market performance, jumped 2.61% at the open, reaching 5,807 after closing at 5,659 the previous Friday. By the time of this report, the index had climbed even further to 5,816, a 2.77% increase from Friday's close. Notably, all "Magnificent 7" stocks, a group of high-performing tech companies, also saw gains, contributing to the bullish sentiment.

The primary catalyst for this market rally appears to be the recent announcement of a temporary trade agreement between the United States and China. The U.S. plans to reduce import duties on Chinese goods from 145% to 30%, while China will lower its tariffs from 125% to 10%. This arrangement is set to last for 90 days, during which the two economic powerhouses will attempt to negotiate a more permanent trade solution.

Despite the positive initial reaction, analysts are urging caution. While the market is celebrating the news, major Wall Street firms have already lowered their S&P 500 targets for 2025. Furthermore, experts like Goldman Sachs' Peter Oppenheimer warn that the full impact of the trade war on corporate earnings may not be fully reflected in the first quarter reports, and the second quarter earnings could potentially shake investor confidence. The outlook remains divided, with some firms, like Wells Fargo, projecting significant further growth for the S&P 500.

BNN's Perspective: The market's enthusiastic response to the U.S.-China trade deal is understandable, but it's wise to temper expectations. The 90-day window provides a crucial opportunity for both sides to solidify a lasting agreement. However, the potential for earnings surprises and the inherent volatility of trade negotiations mean investors should remain vigilant and consider a diversified approach.

Keywords:
U.S. stock market, S&P 500, stock market rally, China trade deal, tariffs, import duties, Magnificent 7, market analysis, Wall Street, Goldman Sachs, Wells Fargo, investor confidence, market outlook, stock market news, trading, economy, financial news

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