By Sinéad Carew and Shashwat Chauhan
(Reuters) – Wall Street’s three major indexes rose sharply on Monday with the S&P 500 marking its highest level since early March as a U.S.-China agreement to temporarily slash tariffs brought some hopes for the easing of a global trade war, which U.S. President Donald Trump ignited in early April.
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%.
Investors showed some relief by favoring riskier assets and turning away from more defensive bets, but they were still left waiting for clarity on where tariffs would ultimately settle.
“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.
“They are going to scale it down to much more reasonable levels so the fall-out from tariffs will probably be more manageable and limited,” said Praveen.
Chris Brigati, chief investment officer at SWBC, an investment company in San Antonio, Texas, said “the market perceives any progress as positive.”
“The market is celebrating it for the moment, but in the long run, there could be complications, and we could see some negative implications,” Brigati said.
U.S. stocks had weathered steep losses and unusually high volatility after Trump announced tariffs on multiple U.S. trade partners on April 2.
Since then, an April 9 announcement of a 90-day pause for countries besides China, solid earnings reports and last week’s U.S.-UK limited trade agreement have helped both the S&P 500 and the tech-heavy Nasdaq regain their lost ground.
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 Dow Jones Industrial Average rose 1,160.72 points, or 2.81%, to 42,410.10 for its highest close since March 26.
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.
Nasdaq closed more than 22% above its lowest session close in the April tariff sell-off but was still almost 8% below its Dec 16 record close.
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