Investors were ebullient Monday on word that the U.S. and China have agreed to suspend their trade war.
At 10:40 a.m. ET Monday, the Dow Jones Industrial average had bounded 346 points, a 1.36% gain, though that was down slightly from the 450 surge that came at market open. The S&P 500 was up nearly 33 points (1.2%), while the Nasdaq index jumped 122 points, a 1.66% increase.
While the ceasefire in the trade war is a temporary one, investors seem hopeful that the agreement made at the G20 summit will become a permanent armistice.
Under the terms, the U.S. and China have agreed not to increase or add any additional tariffs on each other’s goods. The U.S. will keep the 10% tariffs on more than $200 billion in Chinese goods. If a deal is not reached in 90 days, it could raise them to 25%.
There is, though, some confusion about the details of the deal. The White House, President Donald Trump, and China are giving slightly different accounts of what was agreed upon.
Automakers were among the big winners on Wall Street Monday. Both Ford and Tesla were up nearly 4% after Trump tweeted China had agreed to reduce the 40% tariff currently placed on cars made in the U.S. that are sold in that country.
China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%.
— Donald J. Trump (@realDonaldTrump) December 3, 2018
Fears of an extended trade war erased most of the gains Wall Street has recorded this year in prior months. The Dow and S&P are now up slightly for the year.
