Investors rushed back into US assets, powering a more than 3% surge in S&P 500 futures, after China and the US agreed to cut tariffs and de-escalate a trade war that had sown turmoil in global markets.
Nasdaq futures soared 4%; Dow futures jumped 2.3%.
Risk appetite on Wall Street was reignited after Treasury Secretary Scott Bessent hailed the trade discussions as “very robust and productive.” US megacap tech stocks, which had been hard hit this year, were on track to tally some of the biggest gains, with Nasdaq 100 futures poised to re-enter a bull market. Nvidia Corp., Amazon.com Inc., Apple Inc. and Tesla Inc. all rose more than 5% in premarket trading.
The breakthrough in the China-US talks delivers a shot of relief to investors who were bracing for the possibility that a spiraling trade war between the world’s biggest economic powers might cause a global recession. The countries will lower tariffs on each other’s products for 90 days, according to a joint statement released in Geneva.
“The risk of a deep and protracted US recession has gone,” said Guy Miller, chief market strategist at Zurich Insurance Co. “From a company earnings perspective the headwind to revenues has clearly diminished.”
Under the temporary pause unveiled on Monday, the combined US levies will be reduced to 30%, while the 125% Chinese duties on American goods will drop to 10%. Bessent said that neither nation wants to “decouple,” and that talks might lead to “purchasing agreements” by China.
“In our view, equity markets are returning to where they would have moved to if Liberation Day had not happened and Trump had just applied the 10% universal tariff,” said Roberto Scholtes, head of strategy at Singular Bank. “Corporate fundamentals are healthy, first quarter results have substantially surprised on the upside, and there’s plenty of cash to be invested.”
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