Stocks roared on Monday as investors’ worst fears over an escalating trade war between the US and China eased.
Truist co-CIO Keith Lerner described Monday’s stock rally as the market reacting to a temporary truce between the two countries that was simply “better than expectations.”
“Markets are all about expectations,” Lerner said. “And relative to expectations, the short-term news is better. And it’s at a time when the market, I would say more broadly, the Street, is not positioned for this outcome.”
The S&P 500 (^GSPC) soared 3.3% higher. The Dow Jones Industrial Average (^DJI) surged more than 2.8%, or around 1,100 points. The tech-heavy Nasdaq Composite (^IXIC) led gains, rocketing 4.3%.
Read more: The latest news and updates on Trump’s tariffs
A weekend of negotiations between the US and China resulted in a 90-day pause on the bulk of tariffs both nations had placed on each other’s goods. The move means a temporary drop in the US tariff rate on Chinese products from as high as 145% to 30%. The reprieve also slashes China’s retaliatory duties on the US goods from 125% to 10%.
Treasury Secretary Scott Bessent made clear through a series of interviews on Monday that “neither side wants a decoupling” of trade between the two nations. Bessent also added that the 90-day pause could be extended further, “as long as there is good-faith effort, engagement, and constructive dialogue, then we will keep moving forward.”
Read more: What Trump’s tariffs mean for the economy and your wallet
The news sent stocks ripping higher as many on Wall Street had been noting for several weeks that news on tariff agreements between the US and other countries remains a key market catalyst.
“This was sort of the ultimate positive catalyst in terms of getting a pretty meaningful pause with a pretty meaningful trade partner,” Charles Schwab senior investment strategist Kevin Gordon told Yahoo Finance.
Recent laggards amid the massive drawdown seen leading into and after President Trump’s initial April 2 tariff announcement were among the market leaders on Monday. The small-cap Russell 2000 index (^RUT) was up about 3.4%.
Moves like this will be key to watch moving forward to see if the market rebound has further legs, Gordon said.
“The stage that we’re at right now, after you go through that big washdown and you start to see some breadth thrust, this is really the time that you need to see those laggards pick up for that bull market to look a lot more sustainable,” Gordon said.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for the latest economic news and indicators to help inform your investing decisions
Read the latest financial and business news from Yahoo Finance
