US stocks surged Monday in a powerful rebound after the United States and China agreed to a 90-day truce in their ongoing trade war, easing tensions that had weighed heavily on markets for months.The deal, which includes mutual tariff rollbacks, ignited a broad rally across sectors and asset classes.The S&P 500 climbed 2.6% in early trading, bringing it within 5.5% of its all-time high from February. The Dow Jones Industrial Average jumped 957 points, or 2.3%, while the Nasdaq composite surged 3.6%.The rally came after both nations announced substantial reductions in tariffs, a move many analysts labeled the “best-case scenario” from the weekend negotiations in Geneva. The US will cut tariffs on Chinese goods from highs of 145% down to 30%, while China will slash its own levies from 125% to 10%. The 90-day window is intended to provide time for deeper trade discussions aimed at resolving long-standing disputes.This development comes on the heels of last week’s US-U.K. agreement, which reduced tariffs on many British imports to 10%, further fuelling investor optimism.Markets responded with enthusiasm beyond just equities. Crude oil prices rose more than 3%, anticipating stronger global demand. The US dollar strengthened against major currencies, and Treasury yields jumped as investors dialed back expectations for aggressive interest rate cuts by the Federal Reserve. The 10-year Treasury yield rose to 4.45% from 4.37%, while the two-year yield jumped to 3.99% from 3.88%.Still, investors remain cautious. The tariff reductions are temporary, and Wall Street has been whipsawed before by sudden reversals in trade policy. The joint statement acknowledged “substantial progress” but also signaled significant work ahead in talks between the world’s two largest economies.Market gains were widespread. Apparel stocks surged due to their exposure to Chinese manufacturing: Lululemon soared 10%, and Nike gained 7.3%. Travel companies also rebounded, with Carnival up 8.9% and Norwegian Cruise Line rising 8%, as investors bet on a consumer spending boost. Retailers like Best Buy and Amazon rose over 7% as easing tariffs could help protect their margins and prices.Global markets mirrored the upbeat tone. European and Asian indexes posted gains, though smaller than those in the US India’s Sensex rallied 3.7% after a separate ceasefire agreement with Pakistan calmed geopolitical tensions in the region. Pakistan’s KSE 100 index skyrocketed over 9%, briefly halting trading, following both the ceasefire and the IMF’s approval of a $1 billion bailout tranche.Monday’s rally reflects investors’ relief—but also underscores how fragile market sentiment remains in the face of policy unpredictability. With only 90 days until the truce expires, eyes will be on Washington and Beijing for signs of lasting resolution.
