S&P 500 jumps to over two-month high after US-China tariff truce

The U.S. and China announced on Monday that they would slash steep tariffs on each other for 90 days. The U.S. said it will cut tariffs imposed on Chinese imports to 30% from 145% while China said it would cut duties on U.S. imports to 10% from 125%.

Investors showed some relief by favoring riskier assets and turning away from more defensive bets, but they were still left waiting for clarity on where tariffs would ultimately settle.

"We've made some progress with regards to the China/U.S. tariff situation. The market perceives any progress as positive," said Chris Brigati, chief investment officer at SWBC, an investment company in San Antonio, TX.

"The market is celebrating it for the moment, but in the long run, there could be complications, and we could see some negative implications."

Earlier in the day Patrick Kaser, a portfolio manager at Brandywine Global, said: "There's still uncertainty. It's still hard for companies to make decisions on spending. The market is acting like the risk has gone away, but I don't think that's how a lot of businesses and companies are going to view the situation."

U.S. stocks weathered steep losses and unusually high volatility after Trump announced tariffs on multiple U.S. trade partners on April 2.

Since then, an April 9 announcement of a 90-day pause for countries besides China, upbeat earnings reports and last week's U.S.-UK limited trade agreement have helped both the S&P 500 and the tech-heavy Nasdaq regain lost ground.

On Monday, both the S&P 500 and the Nasdaq were set for their biggest single-day jumps since April 9 and the S&P broke above its 200-day moving average for the first time since late March.

At 02:11 p.m. the Dow Jones Industrial Average rose 1,081.30 points, or 2.62%, to 42,330.68, the S&P 500 .SPX gained 170.77 points, or 3.02%, to 5,830.91 and the Nasdaq Composite gained 732.70 points, or 4.09%, to 18,661.61.

Wall Street's "fear gauge", the CBOE Volatility Index, which had hit a peak of 60 in April, traded below 20 on Monday for the first time since late March. In commodities, safe-haven gold XAU= was down 3%.

Of the 11 S&P sub-sectors, just two declined with the defensive utilities sector the biggest laggard, down about 0.5%. Sector gains were led by heavyweight consumer discretionary, up more than 5% and technology, which was up more than 4%.

In technology, Apple advanced more than 6% after a report said the company was considering raising the prices of its fall iPhone lineup.

The earnings season is winding down, with more than 90% of the S&P 500 companies having reported so far. Numbers from retail giant Walmart are due later this week.

NRG Energy jumped about 25% and was the biggest percentage gainer in the S&P 500 after the utility said it would acquire power generation assets from energy infrastructure investment firm LS Power in a deal valued at $12 billion.

Several Federal Reserve officials, including Chair Jerome Powell, are also slated to make public remarks over the week.

Traders expect the Fed to deliver two 25-basis-point rate reductions by the end of 2025, with the first cut now expected in September, according to data compiled by LSEG.

Advancing issues outnumbered decliners by a 2.97-to-1 ratio on the NYSE where there were 140 new highs and 37 new lows.

On the Nasdaq, 3,270 stocks rose and 1,133 fell as advancing issues outnumbered decliners by a 2.89-to-1 ratio.

The S&P 500 posted 14 new 52-week highs and 3 new lows while the Nasdaq Composite recorded 81 new highs and 41 new lows.