US stocks rally on Trump trade de-escalation with China
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NEW YORK: Wall Street stocks finished solidly higher Monday (May 12), cheering an announcement that the United States and China sharply de-escalated a trade war that has rattled global markets.
Major indices traded within a tight range in a buoyant session after US President Donald Trump touted a "total reset" of relations with China that included a steep drop in levies between the countries.
The Dow Jones Industrial Average jumped 2.8 per cent to close at 42,410.10.
The broad-based S&P 500 rallied 3.3 per cent to 5,844.19, while the tech-rich Nasdaq Composite Index rocketed 4.4 per cent to 18,708.34.
"The market is clearly looking at the overall trend towards de-escalation," said LBBW's Karl Haeling.
Since returning to the White House, Trump has imposed tariffs of 145 per cent on many Chinese imports, while Beijing hit back with duties of 125 per cent on US goods.
Following weekend talks between top officials in Switzerland, the United States agreed to temporarily lower its tariffs on Chinese goods to 30 per cent while China will reduce its own to 10 per cent.
Besides lower levies, the US-China announcement and an agreement last week with Britain "will convince business leaders that a final deal is going to be reached at some point," said a note from Briefing.com.
"This should allow them to make investment/spend decisions," the note said.
However, Haeling said both the deal with Britain and Monday's China announcement leave "a lot of details to be ironed out," meaning there remains uncertainty.
Markets are looking ahead to Tuesday's US consumer price index data for April, which will be scrutinised for evidence on the extent to which tariffs result in pricing pressure.
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