Stocks surge following 90-day truce in US-China trade war

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

**Stocks Soar as US and China Agree to Trade War Truce**

U.S. stock markets experienced a significant surge on Monday following a 90-day truce in the ongoing trade war between the United States and China. This agreement, which aims to de-escalate tariffs, has injected optimism into the market, with the S&P 500 jumping 2.6% in early trading. The Dow Jones Industrial Average saw a substantial increase of 957 points, or 2.3%, and the Nasdaq composite rose by 3.6%.

The truce involves both countries agreeing to reduce tariffs, with the U.S. lowering tariffs on Chinese goods and China reciprocating. This move is seen as a positive step, as economists had warned that the escalating trade war could trigger a recession and lead to shortages. The market's positive reaction reflects relief that the immediate threat of further tariff escalation has been averted.

The impact of the truce extends beyond stocks. Crude oil prices rose, reflecting expectations of a stronger global economy. The value of the dollar also climbed against major currencies, and Treasury yields increased, suggesting that the Federal Reserve may not need to aggressively cut interest rates.

The gains were widespread, with apparel, travel, and retail companies experiencing significant boosts. Lululemon and Nike saw notable gains, as did Carnival and Norwegian Cruise Line. Retailers like Best Buy and Amazon also benefited. International markets also saw positive movement, with India and Pakistan agreeing to a truce, further boosting investor confidence.

However, the situation remains fluid. The 90-day truce is a temporary measure, and the long-term outcome of the trade negotiations is uncertain. Wall Street has witnessed rapid shifts in the past, and the market remains sensitive to developments in the trade talks.

BNN's Perspective: While the truce is a welcome development, it's crucial to maintain a balanced perspective. The 90-day window provides a crucial opportunity for further negotiations, but the underlying issues driving the trade war remain. A lasting resolution requires both sides to make significant concessions. The market's exuberance is understandable, but investors should remain cautious and monitor developments closely.

Keywords: US-China trade war, tariffs, stock market, S&P 500, Dow Jones, Nasdaq, trade truce, recession, crude oil, dollar, Treasury yields, Federal Reserve, Lululemon, Nike, Carnival, Norwegian Cruise Line, Best Buy, Amazon, India, Pakistan, trade negotiations, market surge, economic impact

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