US stock futures surged even higher on Monday after the US and China said they have agreed to slash most tariffs for 90 days while further trade talks take place.
S&P 500 futures (ES=F) soared 2.8%, while Dow Jones Industrial Average futures (YM=F) futures rose by over 900 points, or 2.2%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) led gains, rocketing up 3.6%.
Stocks were already making gains over after the US said it had made “substantial progress” in weekend trade talks with China, raising hopes of a potential deescalation in tensions between the world’s two largest economies.
They took another sharp leg higher as Treasury Secretary Scott Bessent told reporters the two sides had reached a deal for a 90-day pause in measures that would see tit-for-tat tariffs cut by 115%.
That brings the US rate on Chinese goods down to 30%, from 145% before the Geneva pact. China is lowering its retaliatory tariffs to 10%, from 125%.
The rally in futures comes after a downbeat week for stocks. All three major indexes fell last week, with the Dow snapping a two-week winning streak in the latest volatile action on Wall Street.
Inflation fears are gripping markets, with the impact of sweeping 145% tariffs on Chinese imports, a move met with retaliatory 125% duties from Beijing, coming to American consumers’ pockets. Year-ahead inflation expectations sit at their highest level in more than 40 years.
Commerce Secretary Howard Lutnick added Sunday that the U.S. remains committed to a 10% baseline tariff rate on all imports to the US, signaling the administration’s aggressive stance even as talks with more nations are underway.
Traders will get their first sense of the initial inflationary effects of the tariffs with the release of key inflation data this week. April’s Consumer Price Index (CPI) report is due Tuesday, followed by retail sales and the Producer Price Index (PPI) on Thursday.
Notable earnings this week include Fox Corporation (FOXA), Monday.com (MNDY), Chegg (CHGG) all releasing reports Monday, with Sony (SONY), Alibaba (BABA), and Wallmart (WMT) all due later in the week.
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