Wall Street Surges on US-China Tariff Truce

Wall Street Surges on US-China Tariff Truce

The market surged higher last week on geopolitical optimism. The week began with the news over the weekend that the US and China had reached a significant truce in the trade war. The primary takeaway is that the US will reduce its tariffs on Chinese imports to 30%, down from 145% at the peak, and China will reduce their tariffs on US Imports to 10%, down from 125%, for the next 90 days.

The impact of these headlines was swift as it sent the S&P 500 3.26% higher to start the week. Every day that followed last week saw additional positive closes for the blue-chip index. This culminated in over 5 percentage points of growth last week. Last week’s gains were enough to rally the markets back to break even and into positive territory year to date.

The gains had an outsized impact on Large Cap Growth which effectively mirrored the gains seen in the Nasdaq. The gains were fairly consistent across the style boxes with only a bit of a laggard performance in Large Cap Value.

Major Markets		YTD as of 05/16/2025
	Nasdaq
	Dow Jones Industrial
	S&P 500
	MSCI World
	MSCI EM
	Russell 2000
	Bar US Agg Bnd

S&P Sectors

YTD as of 05/16/2025

Comm. Services

Cons. Discretionary

Cons. Staples

Energy

Financials

Health Care

Industrials

Info. Technology

Materials

Real Estate

Utilities

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As has been the case a lot recently, when there has been significant positive performance in the S&P 500, the usual sectors of Communications, Consumer Discretionary and Information Technology brought the greatest gains. Even still, every one of the 11 sectors closed higher for the week.

In economic news, the Consumer Price Index came in last week with a 0.2% increase month over month, culminating in a 2.3% year-over-year increase. Meanwhile, the Producer Price Index fell by 0.5% resulting in a 2.4% year-over-year increase. Both of these inflation gauges were mostly in line with expectations and highlight an economy coming back in the range that the FOMC has been targeting.

Finally, Treasuries climbed slightly higher last week. This provided mixed results in the greater bond market. However, the bellwether Bloomberg Barclays US Aggregate Bond index fell by 19 basis points last week.

https://www.reuters.com/world/us-china-tariff-live-updates-bessent-greer-announce-details-constructive-geneva-2025-05-12

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