Wall Street Roars Back: Dow Soars Over 1,000 Points as US-China Strike Truce

Key Highlights:

• Dow surges 1,021 points; S&P 500 jumps 2.9%; Nasdaq rockets 4%
• US and China agree to a 90-day rollback on tariffs, easing global market tensions
• Tech and semiconductor stocks lead gains; Amazon, Tesla, Nvidia shine
• Oil rebounds, gold slides as risk appetite returns
• European markets rally in tandem; FTSE 100 and DAX post solid gains

New York, May 12, 2025 — A sweeping relief rally swept across Wall Street on Monday after the U.S. and China agreed to temporarily roll back tariffs, providing a strong dose of optimism to global markets gripped by weeks of trade war anxiety.

The Dow Jones Industrial Average surged 1,021 points, or 2.5%, logging one of its biggest single-day gains this year. The S&P 500 advanced 2.9%, while the tech-heavy Nasdaq Composite rallied 4%, lifted by outsized gains in mega-cap tech and semiconductor names.

The rally came in the wake of a joint statement from U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, confirming that both nations would reduce reciprocal tariffs by 115% for 90 days. Effective this week, U.S. tariffs on Chinese goods will drop from 145% to 30%, while Chinese tariffs on U.S. imports will fall from 125% to 10%.

“This is a meaningful shift and signals a potential de-escalation of tensions,” said Dan Ives of Wedbush Securities. “It’s particularly bullish for tech and supply chain-sensitive industries, which were bearing the brunt of the tariff crossfire.”

Tech and Chips Take the Lead

The Nasdaq’s rally was driven by strong rebounds in the “Magnificent Seven” tech stocks, with Amazon (AMZN) soaring 7.6%, Tesla (TSLA) up 7.8%, Apple (AAPL) gaining 5%, and Nvidia (NVDA) advancing nearly 4%.

Analysts noted that Amazon sources a significant share of its goods from China, while Tesla and Apple maintain large-scale manufacturing footprints in the region. Reduced tariffs ease cost pressures and supply chain bottlenecks for these firms.

The iShares Semiconductor ETF (SOXX) rose over 6%, as companies like Dell Technologies and On Semiconductor posted strong gains of 7.8% and 10%, respectively, amid hopes that the chip industry would benefit from improved global trade dynamics.

Commodities Swing with Sentiment

Trade optimism also rippled through commodity markets. Crude oil prices surged more than 3%, with U.S. crude climbing to $63.10 per barrel and Brent crude rising to $65.97. Traders bet that renewed global cooperation would spur economic growth and revive energy demand.

On the flip side, gold futures slumped 3% to $3,242.80 per ounce as investors rotated out of safe-haven assets and into riskier equities. The U.S. dollar strengthened, gaining 0.9% against major currencies, reflecting a broader shift in sentiment.

Europe Joins the Party

The bullish sentiment was not confined to Wall Street. European equity markets rallied sharply on Monday, mirroring the rebound in U.S. futures. The UK’s FTSE 100 climbed 1.8%, buoyed by gains in industrials and commodity-linked stocks. Germany’s DAX advanced 2.2%, while France’s CAC 40 jumped 2.4%, lifted by auto and luxury sector strength.

The relief rally came after a prolonged period of volatility, during which European markets had struggled amid global economic uncertainty, weak manufacturing data, and political unrest. Monday’s synchronized move higher was seen as a vote of confidence in the possibility of renewed economic coordination between the world’s two largest economies.

Some Caution Remains

Despite the sharp uptick in equities, analysts urged restraint. “This deal is a temporary reprieve, not a resolution,” cautioned UBS head of fixed income Kurt Reiman, pointing out that the 90-day window leaves room for renewed friction if a broader agreement is not reached.

Investors are also closely watching for U.S. inflation data this week, with April’s Consumer Price Index (CPI) due Tuesday, followed by retail sales and Producer Price Index (PPI) on Thursday. These figures are expected to provide early signals on how recent tariffs have impacted consumer pricing and spending.

Meanwhile, pharmaceutical stocks dipped after President Trump announced plans to slash prescription drug prices by 59%, though he offered little detail. Shares of Merck, Johnson & Johnson, and Teva declined in response.

Looking Ahead

While the U.S.-China agreement offers a welcome reprieve, the road ahead remains fraught with potential flashpoints. The next round of trade talks is expected in a few weeks, and analysts are split on whether this temporary deal can mature into a broader accord.

Yet, for now, Wall Street is embracing the rally. Should gains hold through the week, the S&P 500 could break back into positive territory for 2025, a remarkable turnaround after flirting with bear market levels just weeks ago.

“This is classic Wall Street—oversold to overjoyed in a flash,” quipped one trader on the NYSE floor. “But we’ll take the green while it lasts.”