Why Dow Gained 1,200 Points, Nasdaq 4.35%

U.S. tariff rates on China are relative. At the height of the tariff trade war, the U.S. and China kept escalating tariff rates. At the peak, China faced 145% in tariffs.

Over the weekend, the two countries agreed to temporarily lower tariff rates. Chinese import tariffs will fall from 145% to 30%, while China will impose tariffs of 10%, down from 125%. In response to the 90-day agreement, the Dow Jones added 1,160.72 points (+2.81%). Nasdaq gained 4.35%, and the iShares Russell 2000 (IWM) gained 3.52%.

The U.S. dollar ended its slump, gaining 1.41%. More importantly, the 10-year Treasury Bond ETF yield (IEF) was 4.471%. The peak yield was on January 13 at around 4.8%. Investors sold safe-haven assets, including bonds. Tobacco stocks fell on the day. Altria (MO), Philip Morris International (PM), and British American Tobacco (BTI) fell on Monday.

Speculators rushed back to the magnificent seven stocks. Tesla (TSLA), despite quarterly slumping sales and falling profits, gained 6.75%. Amazon (AMZN) gained even more, adding 8.07% on the day. Meta Platforms (META) increased by nearly 8%.

Amazon rose the e-commerce platform needs less expensive Chinese goods to grow sales. Meta performed well on expectations that Alibaba (BABA), JD.com (JD), and PDD’s (PDD) Temu would resume their advertising spending on the platform.

The tariff tailwind that hurt stocks is now over, at least for the next 90 days.