NEW YORK: Wall Street stocks surged early Monday after the United States and China sharply de-escalated their trade war that has weighed on the global growth outlook.
All three major US indices rallied on the announcement, which will drastically cut the tariffs enacted between the trading partners for 90 days as negotiations continue.
About 20 minutes into trading, the Dow Jones Industrial Average was up 2.5 percent at 42,263.44.
The broad-based S&P 500 also gained 2.5 percent to 5,801.40, while the tech-rich Nasdaq Composite Index climbed 3.3 percent to 18,518.36.
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President Donald Trump had imposed tariffs on Chinese imports of 145 percent, while Beijing hit back with duties of 125 percent on US goods.
Following weekend talks between top officials in Switzerland, the United States agreed to lower its tariffs on Chinese goods to 30 percent while China will reduce its own to 10 percent.
Investors “just want good news. They got good news,” said Steve Sosnick of Interactive Brokers.
“If we were thinking very objectively, we would say, well, 30 percent is still quite high, and still quite inflationary,” Sosnick said. “But, again, it’s better than where we were before.”
Gains were fairly broad-based, but especially big winners included Amazon, up 7.0 percent; Lululemon Athletica, up 8.3 percent; Mattel, up 9.6 percent; and Nike, up 6.4 percent.
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