Investing.com -- The Dow racked a more than 1100-point gain Monday after the White House announced a trade deal with China, with both sides agreeing to lower their respective levies, easing fears of prolonged trade war.
At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average gained 1160 points, or 2.8%, the S&P 500 index climbed 3.3%, and the NASDAQ Composite rose 4.4%.
Tech leads gains on U.S.-China tariffs breakthrough
Tech stocks including Amazon (NASDAQ:AMZN), Alphabet Inc Class A (NASDAQ:GOOGL), and Apple Inc (NASDAQ:AAPL) (NASDAQ:AAPL) stock, soared following the U.S.-China trade deal. Sentiment on Apple also was also supported by a Wall Street Journal reported that the tech giant is considering raising prices for its flagship iPhone without blaming tariffs.
After negotiations over the weekend in Geneva, the U.S. and China agreed to a pause tariffs placed on each other for a 90-day period. Washington moved to slash tariffs on China to 30% and Beijing’s duties on U.S. imports are being cut to 10%, the nations said in a rare joint statement following high-stakes trade talks over the weekend.
Heading into the talks, U.S. President Donald Trump had raised tariffs on China to at least 145%, leading China to respond with retaliatory levies on American imports of 125%.
"The consensus from both delegations is that neither side wanted a decoupling," U.S. Treasury Secretary Scott Bessent said in a news conference.
More trade negotiations are planned between the two, while both sides may conduct working-level consultations on relevant economic and trade issues.
Investors, who have been worried that the trade spat could spiral into a global crisis that threatened economic activity and increased uncertainty for businesses, have welcomed the changes.
“The tone of stock markets has been downward over the last two months, weighed down by fear of the effects of a possible tariff war and other tough-line measures by Donald Trump, but the situation shows signs of some stabilization and even moderate upturns have been seen in the most recent sessions," said Alberto Matellan, managing director at La Financiere Responsable.
“All of this is explained by the loss of confidence caused by the White House, something that has not been reversed; however, if progress is made toward a clearer scenario, the market’s performance will be positive.
“What has happened over the past two months, even before ‘Liberation Day,’ is that Trump has broken trust—the market doesn’t trust Trump or the economy. And once trust is broken, it’s difficult to rebuild it, but also harder to destroy it further. Only by making things clearer can there be a positive development for the stock markets in general.”
China-related stocks including PDD Holdings Inc DRC (NASDAQ:PDD). Alibaba Group Holdings Ltd ADR (NYSE:BABA), and Baidu Inc (NASDAQ:BIDU) rallied sharply.
India and Pakistan ceasefire
In another potential market-moving development, India and Pakistan agreed to a ceasefire after increased tensions in recent days. U.S. President Donald Trump said U.S.-led mediation allowed cooler heads to prevail.
“After a long night of talks mediated by the United States, I am pleased to announce that India and Pakistan have agreed to a FULL AND IMMEDIATE CEASEFIRE,” Trump said on Saturday. Pakistan praised the U.S.’s role in the ceasefire, although India downplayed it.
The ceasefire appeared to be holding, although both India and Pakistan had accused each other of violations.
Pharma stocks fall; Trump plans to cut drug prices
In the corporate sector, the stocks of Pfizer (NYSE:PFE), Eli Lilly (NYSE:LLY) and Johnson & Johnson (NYSE:JNJ) all fell after President Donald Trump said he would cut prescription drug prices by 59%, but gave no further details about his plan to lower medicine costs.
Elsewhere, Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM) gained strongly as crude prices surged in the wake of the trade deal between the two largest oil consuming nations in the world.
There are more earnings to digest this week, in what has generally been a mostly positive first quarter, with prints from Home Depot (NYSE:HD), Palo Alto Networks (NASDAQ:PANW), Lowe’s (NYSE:LOW), Target (NYSE:TGT), and Snowflake (NYSE:SNOW) due in the coming days.
Ambar Warrick contributed to this report.