Stocks Trade Bump: Wall Street Explodes After China Deal

May 12, 2:19 PDT

Key Points Summary: Stocks Trade Bump

Stocks soar after U.S.-China agree to 90-day tariff pause
Dow spikes over 1,100 points, S&P up 3.3%, Nasdaq jumps 4.3%
Crude oil, dollar, and Treasury yields rally amid trade optimism
Retail, travel, apparel stocks lead Wall Street charge
U.S. tariffs cut to 30%, China lowers theirs to 10%
Economists say deal could add 0.4% to GDP growth
Caution remains: Analysts warn of quick shifts in trade talks

Wall Street went wild Monday. U.S. stocks surged as President Donald Trump secured a temporary truce with China. The agreement paused tariffs for 90 days. It sent the Dow Jones Industrial Average soaring over 1,100 points.

The S&P 500 jumped 3.3%. The tech-heavy Nasdaq surged 4.3%. Oil prices rose. Treasury yields spiked. The U.S. dollar flexed strong.

Tariff Freeze Triggers Market Frenzy

The trade ceasefire, announced after weekend talks in Switzerland, shocked investors. Both countries pledged to slash tariffs—U.S. cuts to 30%, down from 145%. China lowered its tariffs to 10%, a dramatic drop from 125%.

Economists warned the trade war threatened shelves, jobs, and growth. Monday’s deal reversed some of those fears.

Wall Street Cheers—and Soars

The S&P is now just 5.1% off its February peak. Traders hailed the breakthrough as the “best-case scenario.” Optimism about trade sent shares flying.

The Dow jumped 2.6%. Nasdaq roared back 4.1%. It marked one of the best days this year.

Dollar Gains, Oil Pops, Gold Slips

The dollar strengthened against the euro, yen, and franc. Crude oil shot up as demand expectations improved. Treasury yields jumped. The 10-year note rose to 4.45%. The two-year yield climbed to 3.99%, showing easing Fed pressure to cut rates.

Gold fell. Safety plays were no longer in demand.

GDP Boost Predicted from Trade Pause

Jonathan Pingle of UBS estimates the 90-day tariff break could boost U.S. growth by 0.4 percentage points. It’s a lifeline as GDP shrank by 0.3% in Q1.

Retailers cheered the news. Carol Schleif of BMO said the pause helps prep for the back-to-school and holiday rush.

Small Stocks, Big Gains

The Russell 2000 jumped 3.6%. Smaller firms benefit most from a healthier domestic economy. Retailers like Best Buy (+5.6%) and Amazon (+7.9%) surged. Travel names such as Carnival (+9.5%) and Delta (+5.3%) also flew.

Apparel brands boomed. Lululemon rose 7.8%, and Nike climbed 7%. With tariffs easing, cost pressures eased too.

World Markets Ride the Wave

Markets across Europe and Asia posted strong gains. India’s Sensex jumped 3.7% after easing tensions with Pakistan. Pakistan’s KSE 100 surged 9.4%. Trading halted after IMF bailout news and ceasefire joy.

The global rally reflected faith in cooler trade winds and stronger economies.

But Risk Lurks in Trump’s Trade Whiplash

Analysts urged caution. Scott Wren of Wells Fargo warned this could be temporary. “No reason to believe this will be anything but slow,” he said.

Deals with the UK and others are still incomplete. And Trump’s unpredictable tariff moves have blindsided markets before.

Still, Monday belonged to the bulls. The world watched a market reborn—at least for now.