Market Surge: Wall Street Rides the Euphoria of U.S.-China Tariff Truce

Wall Street's three major indexes experienced a significant surge on Monday, driven by a U.S.-China agreement to reduce tariffs temporarily, marking the highest level for the S&P 500 since early March. This development offered a glimmer of hope for easing the prolonged global trade tensions that began in early April with U.S. President Donald Trump's imposition of tariffs. Both nations announced a 90-day reduction in steep tariffs against each other, with the U.S. slashing tariffs on Chinese imports to 30% from 145%, while China reduced duties on U.S. imports to 10% from 125%.

Investors showed relief by shifting towards riskier assets and moving away from defensive ones, though uncertainty about the final settlement of tariffs lingered. "It's a relief rally," noted John Praveen, managing director at Paleo Leon in Princeton, New Jersey. He added that the two economic giants seemed to aim to avert the worst-case tariff scenarios by scaling down duties to more manageable levels. Meanwhile, Chris Brigati, chief investment officer at SWBC in San Antonio, Texas, stated, "The market is celebrating the progress, but future complications could pose challenges."

The positive market sentiment prevailed despite earlier losses due to the tariff tension initiated on April 2. The S&P 500, Nasdaq, and Dow posted substantial single-day percentage gains not seen since April 9, with notable improvements aided by solid earnings reports and a limited trade agreement between the U.S. and the UK. The Dow Jones rose by 1,160.72 points to its highest close since late March, as the CBOE Volatility Index, known as Wall Street's "fear gauge," fell below 20 for the first time since late March, reflecting reduced market anxiety.

(With inputs from agencies.)