Stocks Leap After Truce in Trade War

US stocks leapt on Monday after China and the United States announced a 90-day truce in their trade war.

• The S&P 500 rose 184.28 points, or 3.3%, to 5,844.19.
• The Dow Jones Industrial Average rose 1,160.72 points, or 2.8%, to 42,410.10.
• The Nasdaq composite rose 779.43 points, or 4.3%, to 18,708.34.

Hopes for an economy less encumbered by tariffs also sent crude oil prices higher. The US dollar strengthened against other currencies, and Treasury yields jumped on expectations the Federal Reserve won't have to cut interest rates so deeply this year in order to protect the economy, the AP reports. Analysts warned conditions could still quickly change, as has so often happened in President Trump's trade wars.

The United States said in a joint statement that it will cut tariffs on Chinese goods to 30% from as high as 145%. China, meanwhile, said its tariffs on US goods will fall to 10% from 125%. The move announced Monday could add 0.4 percentage points to the US economy's growth this year, according to Jonathan Pingle, US chief economist at UBS. That's a significant chunk, and every bit counts when the US economy shrank at a 0.3% annual rate in the first three months of the year. The 90-day reprieve comes at a vital time for the economy, allowing retailers and suppliers to "ensure that shelves are stocked for the all important back-to-school and holiday shopping seasons," said Carol Schleif, chief market strategist at BMO Private Wealth.

Stocks of smaller companies rallied, and apparel companies were also strong. Lululemon leaped 8.7%. More than a quarter of its fabric came from mainland China last fiscal year, and a reduction in tariffs would mean a less-tough decision on whether to pass along cost increases to customers or to eat them through reduced profits. Nike rose 7.4%. Travel companies jumped on hopes that lower tariffs would encourage more customers to feel comfortable enough to spend on trips. Carnival rose 9.7%, and Delta Air Lines climbed 5.8%. Many retailers climbed because much of what they sell comes from China and elsewhere in Asia. Best Buy rose 6.6%, and Amazon jumped 8.1%

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