Market Soars as US-China Reach Tariff Agreement: May 12, 2025 Market Recap

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Major Indexes Surge on Trade Deal News

The stock market experienced a significant rally on Monday, May 12, 2025, as investors celebrated a breakthrough in US-China trade relations. All major indexes posted substantial gains after the two economic powerhouses agreed to slash tariffs for a 90-day period while working toward a broader trade agreement.

The Dow Jones Industrial Average surged 900 points (2.1%), while the S&P 500 jumped 2.3% and the tech-heavy Nasdaq Composite soared 3.1%. This impressive rally comes after markets had been treading water last week, with the major indexes closing slightly lower as investors anxiously awaited the outcome of the weekend trade talks in Switzerland.

According to the latest data, the S&P 500 is currently trading at 5,802.02 points, the Dow at 42,038.77, and the Nasdaq at 20,743.19. Today’s gains have helped erase recent losses, with the market responding positively to Treasury Secretary Scott Bessent’s announcement that the reciprocal tariffs between the US and China would be reduced from 125% to just 10% during the 90-day negotiation period.

Tech Giants and Semiconductor Stocks Lead the Rally

Technology stocks were among the day’s biggest winners, with the “Magnificent Seven” tech giants posting impressive gains. Amazon (AMZN) led the charge with an 8.3% increase, while Tesla (TSLA) and Meta Platforms (META) both rose nearly 6%. Apple (AAPL) jumped more than 5%, and Nvidia (NVDA) gained over 4%.

The semiconductor sector showed particular strength, with Broadcom (AVGO) and Advanced Micro Devices (AMD) both rising more than 6%. Other chip manufacturers saw even larger gains, with Marvell Technology (MRVL) and Micron (MU) both adding more than 7%, while ON Semiconductor (ON) and Microchip Technology (MCHP) each rose about 9%. The VanEck Semiconductor ETF (SMH) was up 5% overall.

Since President Trump’s “Liberation Day” tariff announcements on April 2, Amazon’s stock has gained 13%, and Tesla’s shares have climbed 18%, demonstrating the market’s resilience despite recent trade tensions.

Other Market Movers and Commodity Updates

Beyond the tech sector, several other stocks posted notable gains. Nike (NKE) climbed 8% to lead Dow gainers, while delivery companies United Parcel Service (UPS) and FedEx (FDX) jumped 6% and 7%, respectively. Chinese e-commerce giant Alibaba (BABA) added 6%, Shopify (SHOP) soared 12%, and Best Buy (BBY) gained 7%.

In the commodities market, gold futures fell 3.1% to $3,240 an ounce as investors moved away from safe-haven assets. Shares of Newmont Mining (NEM), the world’s largest gold producer, tumbled 5% in response.

Meanwhile, oil prices continued their recent rally, with West Texas Intermediate futures up nearly 3.3% at $63.05 per barrel. This extends the recovery from a four-year low reached in late April. Energy stocks responded positively, with oil majors Exxon Mobil (XOM) and Chevron (CVX) each gaining about 3%.

Upcoming Market Events to Watch

Investors should keep an eye on several key economic releases scheduled for this week that could impact market direction:

1. US Inflation Data (Tuesday, May 13): The Consumer Price Index (CPI) for April will be closely watched for signs of inflation, especially given recent concerns about tariffs potentially pushing prices higher.

2. US Retail Sales and Industrial Production (Wednesday, May 14): These April figures will provide insights into consumer spending and manufacturing activity, crucial indicators of economic health.

3. University of Michigan Consumer Sentiment (Friday, May 16): Preliminary May data will be scrutinized for changes in consumer confidence and inflation expectations.

4. UK GDP and Labor Market Statistics: These updates will provide a global economic perspective and may influence international market sentiment.

Trade Deal Details and Future Outlook

According to the joint statement by the US and China, President Trump’s reciprocal tariffs on China will be slashed from 125% to 10%. However, the separate 20% tariff related to fentanyl concerns will remain in place, bringing the total tariff rate to 30%, down from 145%. China has also agreed to reduce its tariffs on US imports to 10%.

Treasury Secretary Scott Bessent indicated that the two sides are scheduled to meet again “in the next few weeks” to work toward a more comprehensive agreement. This 90-day tariff reduction period provides a window for negotiators to address deeper trade issues between the world’s two largest economies.

Market analysts are cautiously optimistic about this development, noting that reduced trade tensions could help alleviate inflation concerns and potentially influence the Federal Reserve’s interest rate decisions in the coming months. The Fed recently held the federal funds rate steady at 4.25-4.5%, citing concerns about tariffs potentially pushing inflation higher.

As global markets respond positively to this trade breakthrough, investors will be closely monitoring upcoming economic data and further developments in US-China relations for indications of sustained market growth through the remainder of 2025.