On a vibrant Monday, Wall Street’s major stock indices experienced a significant boost as the United States and China reached a pivotal agreement to reduce tariffs. This 90-day trade truce marks a crucial step in easing the ongoing trade conflict, with both nations committed to cutting tariffs substantially. The U.S. will decrease tariffs on Chinese products from an astonishing 145% to 30%, while China will lower its tariffs on U.S. goods from 125% to 10%.
Wall Street Reacts Positively
By 10:43 AM EDT, the market was buzzing with activity:
- Dow Jones Industrial Average climbed by 2.34%
- S&P 500 increased by 2.53%
- Nasdaq Composite surged 3.40%
At the opening bell, the Dow soared by 649.7 points, reaching 41,899.05. The S&P 500 jumped 147.3 points to 5,807.2, while the Nasdaq Composite experienced a 745.6-point increase, reaching 18,674.555. This trade agreement has not only influenced stock prices but also caused the U.S. dollar to strengthen against other currencies, while Treasury yields saw an upward trend.
Bond Market Update
The bond market reacted accordingly, with the yield on the 10-year Treasury rising to 4.45%, up from 4.37% last Friday. Similarly, the 2-year yield increased to 3.99%, compared to 3.88% previously.
Notable Market Movers
Several stocks saw impressive gains in the wake of the trade deal:
- Lululemon surged 10%
- Nike increased by 7.3%
- Retail giants like Best Buy and Amazon both gained over 7%
Among the tech titans, Nvidia rose 4%, Apple climbed 4.9%, and Tesla saw a 4.7% increase.
Impact on Commodities
In contrast, the commodities market experienced fluctuations due to the shifting sentiment following the trade deal. Gold prices plummeted by over 2%, with spot gold falling 2.5% to $3,239.54 per ounce. U.S. gold futures also dropped by 3%, settling at $3,244.20.
Other precious metals saw similar declines:
- Spot silver decreased by 0.2% to $32.64 per ounce
- Platinum fell by 1.7% to $977.77
- Palladium dipped 1.6% to $960
Crude Oil Prices Surge
In a positive turn for energy markets, crude oil prices rose by approximately 4% following the tariff news. Brent crude futures increased by $2.08 to $65.99 a barrel, while U.S. West Texas Intermediate (WTI) crude futures saw a rise of $2.05, reaching $63.07.
This groundbreaking trade agreement offers a breath of fresh air to the global economy, reflecting a renewed sense of optimism among investors and traders. As the effects of this deal unfold, it will be essential to monitor how it influences market dynamics moving forward.
