On Monday, the stock market witnessed a significant surge in the shares of numerous companies that procure some of their goods from China. The spike came after the announcement of a U.S.-China agreement to ease recent tariffs and establish a 90-day ceasefire in their ongoing trade conflict, facilitating further discussions aimed at resolving their differences.
The U.S. Trade Representative announced a substantial reduction in tariffs, with the United States agreeing to lower its rate on Chinese goods from 145% to 30%, marking a 115 percentage point decrease. Correspondingly, China consented to reduce its rates on U.S. goods to 10%, mirroring the same decrement.
Despite challenges that still loom over the negotiations between the U.S. and China, optimism swept through Wall Street on Monday, yielding widespread gains across various sectors.
**Footwear and Athletic Gear**
Many companies in this sector, which include a substantial amount of their production in China and other Asian regions, saw considerable increases. The American Apparel & Footwear Association recently noted that about 97% of clothing and footwear purchased in the U.S. is imported, primarily from Asia.
โ Nike experienced a 6.7% increase.
โ Foot Locker saw a rise of 10.1%.
โ Dickโs Sporting Goods went up by 11.4%.
โ Under Armour increased by 6.9%.
**Apparel Companies**
Similar to footwear enterprises, numerous clothing brands manufacture part of their products in China and other Asian locations. Earlier this year, companies such as Abercrombie & Fitch warned about potential impacts on annual sales, with consumer spending showing signs of decline.
โ Lululemon Athleticaโs shares rose by 7.7%.
โ Gap also increased by 7.7%.
โ Ralph Lauren improved by 5.2%.
โ Abercrombie & Fitch climbed by 5.8%.
**Retail**
Diverse retail businesses are seeing market respite as the trade agreement alleviates the need to transfer high tariff-induced costs onto consumers. Previously, the possibility of added financial burdens was a concern for customers. Amazon, for instance, clarified it would not display additional tariff costs on its website products, and Target had expressed concerns about potential impacts on its profits due to tariffs and other expenses.
โ Best Buyโs shares soared by 5.7%.
โ Amazonโs valuation increased by 7.2%.
โ Target experienced a 2.9% rise.
**Travel Companies**
Travel companies are benefiting from optimistic expectations that the reduced tariffs will encourage more customers to engage in air travel and travel spending. Earlier, several major U.S. carriers had scaled back their flight offerings and revised their annual profit projections amid declining travel demand, which reflected broader economic concerns.
โ Carnival rose by 8.3%.
โ Norwegian Cruise Line increased by 6.6%.
โ Royal Caribbean Cruises went up by 3.4%.
โ American Airlines Group saw a 5.4% uptick.
โ Delta Air Lines increased by 6%.