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Stay levelheaded and remember basic investing principles as markets enthusiastically cheer a trade truce between the US and China.
“What I would like to say is be selective, mindful of the fact that this trade policy uncertainty will still linger for some time, and therefore look for companies that are quite insulated from these pressures,” eToro global markets analyst Lale Akoner said on Yahoo Finance’s Opening Bid podcast (video above; listen in below).
Prior to joining eToro in January, Akoner spent 12-plus years in various financial management positions at asset managers such as BNY and Newton Investment Management.
At least for today, investors may have trouble leaning into diversification.
The US and China agreed on Monday to ratchet down the tariff war for 90 days as each economy begins to feel the pressure of bruising penalties.
After a weekend of high-level meetings in Switzerland, the US will reduce “reciprocal” tariffs on goods from China to 10% from 125%. A separate 20% tariff imposed by President Trump over what he says is China’s role in the fentanyl trade will remain intact.
Read more: What Trump’s tariffs mean for the economy and your wallet
China will cut its retaliatory tariffs on US goods to 10% from 125%.
Markets soared in response.
The Dow Jones Industrial Average (^DJI) ripped 1,060 points to 42,309 in early trading. The Nasdaq Composite (^IXIC) and S&P 500 (GSPC) advanced 2.7% and 3.3%, respectively.
Some of the biggest gainers were companies directly exposed to the US-China trade war, mainly retailers that source from China: Five Below (FIVE), Wayfair (W), Boot Barn (BOOT), RH (RH), Newell Brands (NWL), Yeti (YETI), and Dick’s Sporting Goods (DKS).
Akoner said that despite the news, she continues to recommend investors be selective right now and have less exposure to stocks with outsized tariff exposure. Top picks include Bank of America (BAC), JPMorgan (JPM), Mastercard (MA), and Prudential (PRU).
Others on the Street are also taking a measured stance in the face of the market’s euphoric rally.
“I have more questions than answers at the moment but it seems that: (1) more pragmatic voices in the US administration have taken control again; (2) the near-term economy is being prioritised over the long-term security agenda; (3) the US needs trade to continue for now, and perhaps overestimated the leverage high tariffs would give them in extracting concessions,” Deutsche Bank strategist Jim Reid said in a note.
Reid added, “So were the last six weeks all a bad dream? Will the unpredictable nature of US policy continue or are we now on a more conventional path? Not sure I have the answers this morning but, if you’re looking for positives, US policy does seem to have galvanized Europe, is encouraging China to rebalance towards consumption and [Treasury Secretary] Bessent has even discussed how the trade deficit may be partly being caused by the fiscal deficit. So maybe US policy has been a force for good?”
Three times each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled conversations and chats with the biggest names in business and markets on Opening Bid. You can find more episodes on our video hub or watch on your preferred streaming service.
Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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