Full Market Coverage HereBased on the information gathered, I’ll now write the market recap article focusing on the key points requested.
Major Indexes Surge on Trade Deal News
The U.S. stock market experienced a dramatic rally on Monday, May 12, 2025, as investors celebrated a breakthrough in U.S.-China trade relations. The Nasdaq Composite led the charge with an impressive gain of approximately 3.5%, while the S&P 500 and Dow Jones Industrial Average both climbed more than 2%.
By mid-day trading, the Dow was up over 800 points, continuing its momentum from futures trading that indicated a strong opening. The S&P 500 rose 2.49%, rebounding strongly from last week when all three major indexes posted their first losing week in three.
The market surge came after U.S. Treasury Secretary Scott Bessent announced that the U.S. and China had agreed to temporarily slash tariffs following weekend negotiations in Switzerland. The agreement reduces U.S. tariffs on Chinese goods to 30% (down from 145%) and Chinese tariffs on U.S. imports to 10% (down from 125%) for a 90-day period.
Tech Stocks Lead Market Rally
Technology stocks with significant exposure to China were among the day’s biggest winners. Apple (AAPL), which manufactures the majority of its iPhones in China, saw its shares jump more than 6% in morning trading.
Tesla (TSLA), which has faced declining sales in China amid increasing competition from local automakers, surged more than 7% as investors anticipated improved business conditions in the world’s largest electric vehicle market.
Retail Sector Benefits from Tariff Relief
Retailers heavily dependent on Chinese imports saw substantial gains following the tariff announcement. RH jumped 17%, Best Buy (BBY) rose 10%, and Five Below rallied 11% as investors anticipated lower costs for imported goods.
U.S.-listed shares of Chinese companies also rose significantly, with e-commerce giants PDD Holdings, Alibaba (BABA), and JD.com (JD) climbing more than 8%, 7%, and nearly 6%, respectively.
Today’s market rally represents a significant reversal from recent weeks of volatility triggered by President Trump’s initial announcement of sweeping tariffs on all U.S. trading partners.
Energy Sector News
In notable corporate news outside the tariff developments, NRG Energy saw its shares increase almost 9% after announcing plans to acquire a power portfolio from LS Power for $12 billion. The deal, which includes several natural gas generation facilities across nine states, is expected to close in the first quarter of next year and will double NRG’s power generation capacity.
Pharmaceutical Stocks Under Pressure
While most sectors rallied, pharmaceutical companies faced pressure after President Donald Trump announced plans to sign an executive order aimed at reducing prescription drug costs “almost immediately, by 30% to 80%” by implementing a “most favored nation” pricing model that would match prices paid by other countries.
Eli Lilly (LLY) shares declined about 3%, while Amgen and Pfizer (PFE) shares each dropped more than 2%. Johnson & Johnson (JNJ) and Merck (MRK) also saw their shares fall more than 2%.
Upcoming Market Events to Watch
Investors will be closely monitoring several key economic releases this week that could provide insights into how the changing tariff landscape might impact the economy. The Consumer Price Index (CPI) data for April will be released on Tuesday, offering important information about inflation trends following the initial tariff announcements.
Additionally, U.S. retail sales and industrial production figures for April will be released this week, providing early indications of whether GDP could decline again in the second quarter after falling in the first quarter. A second consecutive quarterly decline would constitute a technical recession.
The University of Michigan’s preliminary consumer sentiment data for May will also be closely watched after household confidence slumped and inflation expectations spiked in recent surveys.
Market Outlook
The 90-day tariff reduction agreement provides temporary relief for markets, but uncertainty remains about what will happen when the pause expires on July 8. Commerce Secretary Howard Lutnick indicated on Sunday that the 10% baseline tariff rate on imports from other countries is likely to “be in place for the foreseeable future,” echoing President Trump’s earlier comments.
Market analysts will be watching for signs of how these tariff developments might affect Federal Reserve policy. The Federal Open Market Committee held interest rates steady at 4.25-4.5% at their May meeting despite GDP falling in the first quarter, citing concerns over the potential for tariffs to push inflation higher in the coming months.
As trading continues this week, investors will be balancing optimism over the temporary trade agreement with caution about longer-term economic impacts and upcoming data releases that could signal the direction of both inflation and economic growth.