A trader talks on a phone on the floor of the New York Stock Exchange in New York, the United States, on May 12, 2025. U.S. stocks rallied sharply on Monday after the United States and China announced a temporary rollback of reciprocal tariffs, providing much-needed relief to investors concerned about the escalating trade war's economic fallout. The Dow Jones Industrial Average rose 1,160.72 points, or 2.81 percent, to 42,410.1. The S&P 500 added 184.28 points, or 3.26 percent, to 5,844.19. The Nasdaq Composite Index increased 779.43 points, or 4.35 percent, to 18,708.34. (Xinhua/Liu Yanan)

NEW YORK, May 12 (Xinhua) -- U.S. stocks rallied sharply on Monday after the United States and China announced a temporary rollback of reciprocal tariffs, providing much-needed relief to investors concerned about the escalating trade war's economic fallout.

The Dow Jones Industrial Average rose 1,160.72 points, or 2.81 percent, to 42,410.1. The S&P 500 added 184.28 points, or 3.26 percent, to 5,844.19. The Nasdaq Composite Index increased 779.43 points, or 4.35 percent, to 18,708.34.

Ten of the 11 primary S&P 500 sectors ended in green, with consumer discretionary and technology leading the gainers by adding 5.66 percent and 4.66 percent, respectively. Meanwhile, utilities bucked the trend by losing 0.68 percent.

Following a two-day China-U.S. high-level meeting on economic and trade affairs in Geneva, China and the United States announced Monday a series of tariff modification measures aimed at easing trade tensions between the world's two largest economies.

U.S. Treasury Secretary Scott Bessent described the latest round of trade talks with China as "very productive," noting that both nations agreed to temporarily reduce tariffs. U.S. duties on Chinese imports were cut to 30 percent, while China lowered its tariffs on U.S. goods to 10 percent. Speaking to CNBC's Squawk Box, Bessent said he expects to reconvene with Chinese officials in the coming weeks to begin working on a broader, long-term agreement.

"It's the deal we've been waiting for. So the market is responding accordingly," said Peter Tuchman, senior equity floor broker with TradeMas Inc.

Tuchman told Xinhua that he was very excited about the developments on China-U.S. trade talks and he was satisfied.

Markets responded with enthusiasm. Tesla surged 6.75 percent, while Apple and Nvidia rose 6.18 percent and 5.44 percent, respectively. Companies with heavy exposure to Chinese supply chains led the gains: Best Buy climbed 6.56 percent, Dell Technologies rose 7.83 percent, and Amazon jumped 8.07 percent.

A trade deal between the United States and China means a lot to the U.S. stock market, according to Tuchman.

"Without a deal with China, it was starting to eat away at the ability for companies to give guidance for the next quarter. And that's the biggest thing weighing on the market now," Tuchman said.

Tuchman expected that the S&P 500, at a minimum, should be getting back to around 6,100 points by the end of 2025.

Dan Ives, analyst at Wedbush, said in a note that autos are likely the next focal point in U.S.-China discussions. "This positive U.S./China news gives the market hope that Trump and Bessent will now focus on the Big Three automakers and broader U.S. auto industry."

In a separate move, U.S. President Donald Trump signed an executive order Monday aimed at reducing domestic drug prices, pledging price cuts of at least 59 percent. While the order may raise prices overseas, a White House official said it could ultimately boost revenue for U.S. pharmaceutical firms.

The combination of easing trade tensions and action on drug pricing helped propel stocks to their highest levels in weeks, as investors grew more optimistic about policy direction and global economic prospects. "Markets are all about expectations," Truist co-CIO Keith Lerner said. "And relative to expectations, the short-term news is better. And it's at a time when the market, I would say more broadly, the Street, is not positioned for this outcome."

Some experts advise being selective as trade talks continue. "What I would like to say is be selective, mindful of the fact that this trade policy uncertainty will still linger for some time, and therefore look for companies that are quite insulated from these pressures," eToro global markets analyst Lale Akoner said.

Investors are bracing for a key round of economic data this week. The consumer price index (CPI) report for April, scheduled for release on Tuesday, will be closely watched for any signs of rising consumer prices. Retail sales and the producer price index (PPI) will be published on Thursday. ■

Traders work on the floor of the New York Stock Exchange in New York, the United States, on May 12, 2025. U.S. stocks rallied sharply on Monday after the United States and China announced a temporary rollback of reciprocal tariffs, providing much-needed relief to investors concerned about the escalating trade war's economic fallout. The Dow Jones Industrial Average rose 1,160.72 points, or 2.81 percent, to 42,410.1. The S&P 500 added 184.28 points, or 3.26 percent, to 5,844.19. The Nasdaq Composite Index increased 779.43 points, or 4.35 percent, to 18,708.34. (Xinhua/Liu Yanan)

Traders work on the floor of the New York Stock Exchange in New York, the United States, on May 12, 2025. U.S. stocks rallied sharply on Monday after the United States and China announced a temporary rollback of reciprocal tariffs, providing much-needed relief to investors concerned about the escalating trade war's economic fallout. The Dow Jones Industrial Average rose 1,160.72 points, or 2.81 percent, to 42,410.1. The S&P 500 added 184.28 points, or 3.26 percent, to 5,844.19. The Nasdaq Composite Index increased 779.43 points, or 4.35 percent, to 18,708.34. (Xinhua/Liu Yanan)

Traders work on the floor of the New York Stock Exchange in New York, the United States, on May 12, 2025. U.S. stocks rallied sharply on Monday after the United States and China announced a temporary rollback of reciprocal tariffs, providing much-needed relief to investors concerned about the escalating trade war's economic fallout. The Dow Jones Industrial Average rose 1,160.72 points, or 2.81 percent, to 42,410.1. The S&P 500 added 184.28 points, or 3.26 percent, to 5,844.19. The Nasdaq Composite Index increased 779.43 points, or 4.35 percent, to 18,708.34. (Xinhua/Liu Yanan)

A trader works on the floor of the New York Stock Exchange in New York, the United States, on May 12, 2025. U.S. stocks rallied sharply on Monday after the United States and China announced a temporary rollback of reciprocal tariffs, providing much-needed relief to investors concerned about the escalating trade war's economic fallout. The Dow Jones Industrial Average rose 1,160.72 points, or 2.81 percent, to 42,410.1. The S&P 500 added 184.28 points, or 3.26 percent, to 5,844.19. The Nasdaq Composite Index increased 779.43 points, or 4.35 percent, to 18,708.34. (Xinhua/Liu Yanan)

Traders work on the floor of the New York Stock Exchange in New York, the United States, on May 12, 2025. U.S. stocks rallied sharply on Monday after the United States and China announced a temporary rollback of reciprocal tariffs, providing much-needed relief to investors concerned about the escalating trade war's economic fallout. The Dow Jones Industrial Average rose 1,160.72 points, or 2.81 percent, to 42,410.1. The S&P 500 added 184.28 points, or 3.26 percent, to 5,844.19. The Nasdaq Composite Index increased 779.43 points, or 4.35 percent, to 18,708.34. (Xinhua/Liu Yanan)

Traders work on the floor of the New York Stock Exchange in New York, the United States, on May 12, 2025. U.S. stocks rallied sharply on Monday after the United States and China announced a temporary rollback of reciprocal tariffs, providing much-needed relief to investors concerned about the escalating trade war's economic fallout. The Dow Jones Industrial Average rose 1,160.72 points, or 2.81 percent, to 42,410.1. The S&P 500 added 184.28 points, or 3.26 percent, to 5,844.19. The Nasdaq Composite Index increased 779.43 points, or 4.35 percent, to 18,708.34. (Xinhua/Liu Yanan)