U.S. stocks soared on Monday after a major de-escalation in trade tensions between the United States and China. The Dow Jones jumped 1,161 points (2.81%), the S&P 500 rose 3.26%, and the Nasdaq surged 4.35%, marking their biggest single-day gains in over a month. The rally followed news that top trade officials from both nations agreed to significantly reduce tariffs, prompting optimism that a recession could be avoided.
The Nasdaq, which had recently been in bear market territory, rallied more than 20% from its yearly low, officially entering a new bull market. While the index is still down roughly 3.1% for the year, the recent upswing suggests renewed investor confidence, especially in the tech sector, which has been heavily impacted by the trade war.
U.S.-China Slash Tariffs, Ease Recession Fears, Establish Path to Trade Stability
Trade tensions had sharply escalated after President Trump implemented sweeping tariffs on global imports, especially targeting China with rates as high as 145%. In response, China imposed its own retaliatory tariffs. However, during a weekend summit in Geneva, U.S. and Chinese negotiators agreed to cut tariffs by 115 percentage points — a dramatic reversal that few predicted.
Stocks Surge as U.S. and China Slash Tariffs, Ignite Bull Market and Ease Global Recession FearsA key outcome of the Geneva talks was the creation of a mechanism to avoid future tariff hikes. President Trump confirmed that tariffs would not automatically revert to previous levels if trade discussions stalled. This framework, which lowers tensions significantly, is seen as a major step toward long-term trade stability between the two economic powers.
Economists and analysts say the reduction in tariffs eases pressure on global financial systems and reduces the likelihood of a recession. Investors responded by shifting from safe-haven assets to riskier ones — gold fell 2.7%, U.S. Treasury yields rose, and the dollar strengthened. Oil prices also rebounded as fears of a demand slump faded.
Trade Deal Boosts Tech Giants, Signals Strategic Shift and Economic Opening with China
Technology stocks were among the biggest gainers, with Apple, Tesla, Nvidia, Amazon, and Intel all posting significant increases. Other sectors hit hard by the trade war, including luxury goods and automakers, also rebounded. Analysts said the “risk-on” sentiment reflected investor surprise at the scale and speed of the trade deal.
Treasury Secretary Scott Bessent emphasized the U.S. negotiated from a position of strength, citing China’s economic vulnerabilities. He noted that while the tariff rollback is significant, it’s a pause — not a reversal — in trade strategy. The U.S. plans to focus on securing strategic supply chains for critical goods and tackling non-tariff barriers affecting American companies abroad.
White House economic adviser Kevin Hassett hailed the deal as a “historic fresh start” for U.S.-China relations. He highlighted new trade openings, including beef exports to the UK and reduced Chinese trade barriers. Despite earlier hardline rhetoric, Hassett insisted the administration’s goal remains securing fair trade and economic security for the United States.
