May 13, 2025 – New York, NY – Wall Street surged into rally mode on Monday, with the Dow Jones Industrial Average leaping more than 1,100 points and the Nasdaq and S&P 500 posting their biggest one-day gains in months, after a surprise tariff rollback agreement between the U.S. and China injected a jolt of optimism into global markets.
The S&P 500 soared 3.3%, reaching its highest level since March 3, while the tech-heavy Nasdaq exploded 4.3% higher, as investors dove back into risk-on territory. The Dow Jones jumped 2.8%, led by industrials and consumer goods companies poised to benefit from reduced trade barriers.
Trade Truce Sparks Investor Euphoria
The buying spree was triggered by news that Washington and Beijing had agreed to a 90-day pause in their escalating trade war, with both sides slashing punitive tariffs to levels not seen in years. The U.S. announced it would reduce duties on most Chinese imports from 145% to 30%, while China responded by cutting its own tariffs on American goods from 125% to 10%.
Markets reacted with a burst of enthusiasm, as the rollback was broader and deeper than expected, easing fears that the world’s two largest economies were on a collision course.
“This move is a clear signal that cooler heads are prevailing,” said Dana Mitchell, a senior strategist at Greystone Capital. “It gives businesses room to breathe, consumers a break on prices, and investors a reason to cheer.”
Tech Leads the Charge
Tech stocks, particularly those with significant China exposure, were among the biggest winners. Apple, Nvidia, and Tesla saw sharp rebounds, helping the Nasdaq post its best day of 2025 so far.
Semiconductor and chip equipment stocks rallied hard, as the tariff rollback signaled a thawing of export restrictions and supply chain tensions that had weighed on the sector for months.
Pharma Gets a Boost from Trump’s Drug Order
Also contributing to the rally was President Trump’s executive order signed Monday to lower domestic drug prices by as much as 59%, a move cheered by Wall Street for its potential to boost pharmaceutical company revenues overseas.
While prices are expected to fall for U.S. consumers, a White House official told Axios that global prices could rise to offset the shift, potentially creating a windfall for American drugmakers in foreign markets.
Commodities, Dollar, and Yields Rise
The upbeat trade news also sent oil prices surging, with West Texas Intermediate and Brent crude leading a rally in commodities. The U.S. dollar climbed against major currencies, and Treasury yields edged higher, reflecting renewed investor appetite for risk and expectations of economic momentum.
Eyes on Inflation Data
Despite the rally, traders are closely watching inflation data due out this week, which could shape the next moves for the Federal Reserve. The Consumer Price Index (CPI) report drops Tuesday, followed by retail sales and the Producer Price Index (PPI) on Thursday.
These reports will be the first to reflect any inflationary pressure from previous tariffs, providing insight into whether the truce will cool or accelerate price increases.
Market Recap:
- Dow Jones Industrial Average: +1,100 points (+2.8%)
- S&P 500: +3.3%
- Nasdaq Composite: +4.3%
- Oil: Up sharply
- Dollar & Treasury yields: On the rise
With global trade tensions easing and corporate America breathing a sigh of relief, markets are embracing the possibility that the worst of the trade war may be over at least for now. Investors will now wait to see if this truce turns into a long-term treaty or another temporary pause in an ongoing economic tug-of-war.
