The major U.S. index futures are currently pointing to a sharply higher open on Monday, with stocks poised to more than offset the modest losses posted last week.
The upward momentum on Wall Street comes following news of a U.S.-China trade deal that drastically reduces the massive tariffs on each other's goods.
The White House said the agreement calls for the U.S. and China to each lower tariffs by 115 percent while retaining an additional 10 percent tariff.
The U.S. will retain tariffs imposed in response to the fentanyl national emergency, resulting in an effective tariff rate on Chinese goods of 30 percent.
In previous tit-for-tat moves, tariffs on U.S. and Chinese goods had spiked as high as 125 percent and 145 percent, respectively, which Treasury Secretary Scott Bessent had described as the "equivalent of an embargo."
The White House said the 34 percent reciprocal tariffs on U.S. and Chinese goods will be suspended for 90 days beginning Wednesday, May 14th.
Both nations also agreed to establish a mechanism to continue important discussions about trade and economics, the White House said.
"While the trade spat has only been dialed back for 90 days, it's a major breakthrough as far as investors are concerned," said Russ Mould, investment director at AJ Bell. "The fact the two countries were talking was already a major win given they've been at each other's throats during the first and second Trump presidential terms."
"Some people thought the best-case outcome from the weekend's discussions would be an agreement to simply keep talks going," he added. "Therefore, to have reached an initial deal so quickly and one that rolls back tariffs by a large amount is a pleasant surprise."
After failing to sustain an initial move to the upside, stocks showed a lack of direction over the course of the trading session on Friday. The major averages spent much of the day bouncing back and forth across the unchanged line before eventually closing narrowly mixed.
While the Nasdaq crept up 0.78 points or less than a tenth of a percent to 17,928.92, the S&P 500 edged down 4.03 points or 0.1 percent to 5,659.91 and the Dow dipped 119.07 points or 0.3 percent to 41,249.38.
For the week, the S&P 500 declined by 0.5 percent, the Nasdaq fell by 0.3 percent and the Dow slipped by 0.2 percent.
The early strength on Wall Street came amid optimism about a potential U.S.-China trade deal ahead of Treasury Secretary Scott Bessent's talks with Chinese officials in Switzerland this weekend.
A Bloomberg report citing people familiar said the U.S. is hoping to slash its China tariffs to below 60 percent from the current level of at least 145 percent during the weekend talks.
However, President Donald Trump said in a post on Truth Social that a higher "80% Tariff on China seems right," partly offsetting the positive sentiment.
While Trump also said many trade deals are "in the hopper," traders remain cautious even after yesterday's announcement of the framework of a U.S.-U.K. trade deal.
Among individual stocks, shares of Lyft (LYFT) skyrocketed after the ride-sharing company reported a first quarter profit compared to a year-ago loss and boosted its share buyback plan to $750 million.
Shares of The Trade Desk (TTD) also spiked after the digital marketing company reported better than expected first quarter results.
On the other hand, shares of Affirm Holdings (AFRM) plunged after the buy now, pay later company reported an unexpected fiscal third quarter profit but provided disappointing revenue guidance for the current quarter.
Travel booking platform Expedia (EXPE) also moved sharply lower after reporting first quarter revenue that missed estimates and issuing soft guidance.
Reflecting the lackluster performance by the broader markets, most of the major sectors ended the day showing only modest moves on the day.
Gold stocks showed a strong move to the upside, however, with the NYSE Arca Gold Bugs Index surging by 3.3 percent. The strength among gold stocks came amid a sharp increase by the price of the precious metal.
Networking, telecom and energy stocks also saw some strength on the day, while biotechnology and pharmaceutical stocks moved to the downside.
Commodity, Currency Markets
Crude oil futures are spiking $2.38 to $63.40 a barrel after jumping $1.11 to $61.02 a barrel last Friday. Meanwhile, after surging $38 to $3,344 an ounce in the previous session, gold futures are plunging $111.10 to $3,232.90 an ounce.
On the currency front, the U.S. dollar is trading at 148.01 yen versus the 145.37 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1115 compared to last Friday's $1.1250.
Asia
Asian stocks rose on Monday after trade talks between the U.S. and China showed progress in de-escalating tensions. Ahead of a joint statement to be released later in the day, financial markets and businesses are waiting to learn what marathon talks over the weekend achieved.
The U.S. dollar index was under pressure, slipping for the second straight day amid economic concerns and uncertainty over the Federal Reserve's rate path.
Oil prices surged, while gold remained under pressure and traded at a fresh weekly low below $3,250 per ounce on easing demand for havens after China and the U.S. touted "substantial progress" in their trade talks.
China's Shanghai Composite Index jumped 0.8 percent to 3,369.24 following the trade talks with the U.S. in Geneva over the weekend.
Chinese Vice Premier He Lifeng said both sides had agreed to "establishing a consultation mechanism" for further discussions on trade and economic issues.
Hong Kong's Hang Seng Index soared 3.0 percent to 23,549.46, rising for an eighth day and marking the best run in a year.
Japanese markets eked out modest gains on signs of improving U.S.-China relations. The Nikkei 225 Index rose 0.4 percent to 37,644.26, while the broader Topix Index settled 0.3 percent higher at 2,742.08.
Panasonic Holdings fell nearly 2 percent after announcing it will cut 10,000 staff and expects to book restructuring costs of 130 billion yen ($896.06 million) this business year.
Nippon Steel tumbled 3.8 percent after the company said it expects net profit to slide 43 percent in the fiscal year ending March 2026.
Seoul stocks rallied, with the Kospi jumping 1.2 percent to 2,607.33, led by auto and technology stocks. SK Hynix, Hyundai Motor, Kia Corp. and Samsung Electronics soared 3-5 percent.
Australian markets ended marginally higher, giving up early gains. While energy and mining stocks topped the gainers list, healthcare stocks succumbed to selling pressure after U.S. President Donald Trump said he would cut drug prices by 30-80 percent to match other wealthy nations.
Bank ended on a mixed note. Grocery giant Woolworths dropped 1.5 percent after announcing it will drop the price of nearly 400 items.
Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index gained 0.6 percent to close at 12,676.75.
Europe
European stocks have advanced on Monday after the U.S. and China struck a deal to suspend tariffs for 90 days following negotiations in Switzerland over the weekend.
U.S. trade representative Jamieson Greer announced a 90-day pause on tariffs. The U.S. tariffs on Chinese goods will fall to 30 percent from 145 percent, while Chinese duties on U.S. imports will fall to 10 percent from 125 percent, the two countries announced today.
While the French CAC 40 Index is up by 1.5 percent, the German DAX Index and the U.K.'s FTSE 100 Index are both up by 0.7 percent.
Semiconductor shares have surged, with ASML Holding surging nearly 5 percent and Infineon Technologies spiking 6 percent.
UniCredit shares have also jumped. The Italian lender raised its 2025 after posting a surprise increase in quarterly profit.
Technip Energies NV, a global technology and engineering powerhouse, has also surged on share buyback news.
British online trading firm IG Group Holdings has also risen after announcing a General Meeting to discuss a capital reduction plan.
Meanwhile, German steelmaker Salzgitter AG has also slumped after it slipped to a loss in its first quarter on weak prices.
Healthcare stocks area also under selling pressure ahead of the announcement of a new U.S. pharma pricing policy.
On a light day on the economic front, U.K. recruitment activity remained weak at the start of the second quarter as demand for staff deteriorated amid the rise in the salary inflation due to the increases in the national minimum and living wage rates, a report compiled by S&P Global showed.
U.S. Economic News
Federal Reserve Board Governor Adriana Kugler is scheduled to speak on the economic outlook at the National Association for Business Economics and the Central Bank of Ireland's International Economic Symposium at 10:25 am ET.
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May 23, 2025 13:17 ET Housing sales data was among the news out of the U.S. economy in a relatively slow week for economic news. In Europe, preliminary results from the purchasing managers’ survey threw light on the trends in the private sector economy. The U.K. inflation print also turned heads as it came above expectations. In main news in the Asia-Pacific, central banks of Australia and China announced their latest policy moves.