WASHINGTON (dpa-AFX) - After ending last Friday's choppy trading session narrowly mixed, stocks have shown a substantial move to the upside during trading on Monday. With the surge, the Nasdaq and the S&P 500 have reached their best intraday levels in over two months.
The major averages have moved roughly sideways after an early spike, holding on to strong gains. The Nasdaq is up 630.57 points or 3.5 percent at 18,559.49, the S&P 500 is up 144.27 points or 1.6 percent at 5,804.18 and the Dow is up 952.12 points or 2.3 percent at 42,201.50.
The rally on Wall Street comes following news of a U.S.-China trade deal that drastically reduces the massive tariffs on each other's goods.
The White House said the agreement calls for the U.S. and China to each lower tariffs by 115 percent while retaining an additional 10 percent tariff.
The U.S. will retain tariffs imposed in response to the fentanyl national emergency, resulting in an effective tariff rate on Chinese goods of 30 percent.
In previous tit-for-tat moves, tariffs on U.S. and Chinese goods had spiked as high as 125 percent and 145 percent, respectively, which Treasury Secretary Scott Bessent had described as the 'equivalent of an embargo.'
The White House said the 34 percent reciprocal tariffs on U.S. and Chinese goods will be suspended for 90 days beginning Wednesday, May 14th.
Both nations also agreed to establish a mechanism to continue important discussions about trade and economics, the White House said.
'While the trade spat has only been dialed back for 90 days, it's a major breakthrough as far as investors are concerned,' said Russ Mould, investment director at AJ Bell. 'The fact the two countries were talking was already a major win given they've been at each other's throats during the first and second Trump presidential terms.'
'Some people thought the best-case outcome from the weekend's discussions would be an agreement to simply keep talks going,' he added. 'Therefore, to have reached an initial deal so quickly and one that rolls back tariffs by a large amount is a pleasant surprise.'
Sector News
Computer hardware stocks are turning in some of the market's best performances amid a broad based rally, with the NYSE Arca Computer Hardware Index soaring by 6.4 percent to its best intraday level in well over a month.
Substantial strength is also visible among transportation stocks, as reflected by the 6.2 percent spike by the Dow Jones Transportation Average. The index has surged to a two-month intraday high.
Semiconductor stocks have also shown a significant move to the upside, driving the Philadelphia Semiconductor Index up by 6.2 percent.
Oil service, banking and networking stocks are also seeing considerable strength, while gold stocks are among the few groups bucking the uptrend amid a steep drop by the price of the precious metal.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Monday. Japan's Nikkei 225 Index rose by 0.4 percent, China's Shanghai Composite Index advanced by 0.8 percent and Hong Kong's Hang Seng Index soared by 3.0 percent.
The major European markets have also moved to the upside on the day. While the French CAC 40 Index is up by 1.2 percent, the U.K.'s FTSE 100 Index is up by 0.3 percent and the German DAX Index is up by 0.1 percent.
In the bond market, treasuries have moved sharply lower in reaction to the U.S.-China trade deal. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6.6 basis points at 4.441 percent.
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